VIA ELECTRONICFILING ANDOVERNIGHTDELIVERYLisa.c.schwartz(cV,state.or.us Ann English Gravatt Renewable Northwest Project 917 SW Oak Ste. 303 Portland, OR 97205 [email protected] Coordinator,

March 4, 2008

VIA ELECTRONIC FILINGAND OVERNIGHT DELIVERY

Oregon Public Utility Commission550 Capitol Street NE, Suite 215Salem, OR 97310-2551

Attn: Vikie Bailey-Goggins, AdministratorRegulatory and Technical Support

825 NE Multnomah, Suite 2000Portland, Oregon 97232

RE: Application ofPacifiCorp In the Matter ofPacifiCorp's Request for Approval ofa2008R-l Solicitation Process for New Renewable Resources

Enclosed for filing by PacifiCorp d.b.a. Pacific Power is an Application to open a docketfor the above-captioned matter and a request to issue a solicitation for an independentevaluator. A copy of the enclosed Application has been served on all parties inPacifiCorp's on-going request for proposals proceeding, Docket UM 1208, as indicatedon the attached Certificate of Service.

Informal inquiries may be directed to Joe1le Steward at (503) 813-5542.

Very truly yours,

~K~Andrea L. KellyVice President, Regulation

Enclosurecc: Service List UM 1208

CERTIFICATE OF SERVICE

I hereby certify that I served a true and correct copy of the foregoing document in

Docket No. UM 1208 on the following named person(s) below via e-mail to said

person(s) at his or her last-known addressees) indicated below:

SERVICE LISTUM 1208

Susan K. AckermanAttorney9883 NW Nottage Dr.Portland, OR [email protected]

Harold T. JuddAccion Group Inc.244 North Main St.Concord, NH [email protected]

Jason EisdorferEnergy Program DirectorCitizens' Utility Board of Oregon610 SW Broadway Ste. 308Portland, OR [email protected]

Melinda J. DavisonDavison Van Cleve PC333 SW Taylor Ste. 400Portland, OR [email protected]

Michael T. WeirichAssistant Attorney General1162 Court St. NESalem, OR [email protected]

Steven WeissSr. Policy AssociateNorthwest Energy Coalition4422 Oregon Trail Ct. NESalem, Or [email protected]

Alan KesslerAccion Group Inc.5241 Strathmore Ave.Kensington, MD [email protected]

Andrew LudwigCraig RoachBoston Pacific Company, Inc.1100 New York Avenue NWSuite 490 EastWashington DC [email protected]@bostonpacific.com

OPUC DocketsCitizens' Utility Board of Oregon610 SW Broadway Ste. 308Portland, OR [email protected]

Janet L. PrewittAssistant Attorney General1162 Court S1. NESalem, OR [email protected]

James EdelsonEcumenical Ministries of Oregon415 NE Miramar Pl.Portland, OR [email protected]

Robert D. KalmExecutive DirectorNW Independent Power Producers7900 SE 28th St. Ste 200Mercer Island, WA [email protected]

Philip H. CarverSenior Policy AnalystOregon Department of Energy625 Marion St. NE Ste. 1Salem, OR [email protected]

Jeremiah BaumanOregon State Public Interest ResearchGrp1536 SE 11 th Ave.Portland, OR [email protected]

Randall J. FalkenbergRFI Consulting, Inc.PMB 362Sandy Springs, GA [email protected]

DATED: March 4, 2008.

Lisa C. SchwartzOregon Public Utility CommissionPO Box 2148Salem, OR 97308-2148Lisa.c.schwartz(cV,state.or.us

Ann English GravattRenewable Northwest Project917 SW Oak Ste. 303Portland, OR [email protected]

Coordinator, Administrative Services

BEFORE THE PUBLIC UTILITY COMMISSIONOF OREGON

UM

In the Matter ofPacifiCorp's Request forApproval of a 2008R-l SolicitationProcess for New Renewable Resources

APPLICATION TO OPEN DOCKETAND REQUEST TO ISSUESOLICITATION FOR INDEPENDENTEVALUATOR

1 PacifiCorp dba Pacific Power hereby requests that the Public Utility Commission of

2 Oregon ("Commission") (l) open a docket for the approval of a solicitation process for new

3 renewable resources ("2008R-I RFP"); (2) allow PacifiCorp to request and receive

4 comments on the draft request for proposal for appointment of an independent evaluator

5 attached as Exhibit A to this filing for its 2008R-l RFP; and (3) upon receipt of comments

6 from interested parties, and following review with Commission staff, subsequently issue the

7 request for proposal in order to solicit an independent evaluator for the 2008R-I RFP.

8 Shortly after submission of this application, PacifiCorp will also be filing a motion for a

9 protective order to be issued in this docket to cover the solicitation of the independent

10 evaluator and the 2008R-l RFP process.

11 In support of this Application, PacifiCorp states as follows:

12 1. This Application to open a docket and begin the solicitation process for an

13 independent evaluator is filed pursuant to Order No. 06-446 which requires the Company to

14 issue a request for proposals for acquisition of Major Resources.

15 2. Communications regarding this Application should be addressed to:

Oregon DocketsPacifiCorp825 NE Multnomah, Suite 2000Portland, OR 97232Phone: 503.813.5542Email: [email protected]

Natalie HockenPacifiCorp825 NE Multnomah, Suite 2000Portland, Oregon 97232Phone: 503.813.7205

Email: [email protected]

Page 1 - APPLICATION TO OPEN DOCKET AND REQUEST TO ISSUE SOLICITATION FORINDEPENDENT EYALUATOR

1 In addition, PacifiCorp requests that all data requests regarding this Application be sent to the

2 following:

3 By email (preferred):[email protected]

4 By fax:

5 By regular mail:678

503-813-6060

Data Request Response CenterPacifiCorp825 NE Multnomah, Suite 2000Portland, Oregon 97232

9 Informal questions may be directed to Joelle Steward, Oregon Regulatory Affairs

10 Manager at 503-813-5542.

11 Introduction of the 2008R-l RFP

12 3. The purpose of the 2008R-l RFP is to establish a Commission approved RFP

13 that can be used, as needed, to request and evaluate proposals from bidders to fulfill a portion

14 of the supply-side renewable resources identified in PacifiCorp's 2007 Integrated Resource

15 Plan ("IRP"). PacifiCorp is proposing a form of RFP process that would enable the Company

16 to call for new bidders or updated bids on an as needed basis to provide needed flexibility in

17 the procurement process due to timing concerns, uncertainty with the status of the production

18 tax credit, the status of the then-current wind turbine supply market, and quality and quantity

19 of bids received. Similar to the process PacifiCorp used with its RFP 2003-B in Docket UM

20 1118, once the 2008R-I RFP is approved by the Commission, PacifiCorp would use the form

21 and process associated with the 2008R-l RFP to solicit bids from the market. PacifiCorp will

22 notify the Commission of its intent to re-issue an "updated 2008R-l RFP" and the detail

23 associated with such updates. Should the Commission determine that the updates are

24 substantive modifications and necessitate a filing with the Commission for approval of the

25 updates then the Company will make such a filing. PacifiCorp requests that the Commission

26 make a determination if a filing is needed for any noticed update within a thirty (30) day time

Page 2 - APPLICATION TO OPEN DOCKET AND REQUEST TO ISSUE SOLICITATION FORINDEPENDENT EVALUATOR

period. Appointment or reappointment of an independent evaluator (IE) would be addressed

2 by the Company and the Commission with each 2008R-1 RFP update notice.

3 4. The 2008R-1 RFP will solicit system-wide (east and west) renewable

4 resources new to the Company's portfolio and which are capable of delivery in or into

5 PacifiCorp's network transmission system, or to another Company prescribed point(s) that

6 enables the Company to meet it obligations, within the prescribed time period. The first

7 request for renewable resources pursuant to the 2008R-1 RFP will be for renewable resources

8 with commercial operation dates prior to December 31, 2011. The targeted acquisition

9 quantity for this 2008R-I RFP will be up to 500 MW; the 2008R RFP may solicit up to 300

10 MW.

11

12

5.

6.

The chart below identifies the renewable resources targeted in the current IRP:

Commercial Operation Target Quantity

Date

2008 Up to 200 MW

2009 Up to 100 MW

2010 Up to 300 MW

2011 Up to 200 MW

For purposes of the 2008R-l RFP, each renewable resource is limited in size

13 to no more than 300 MW,l which is the upper limit permitted by Utah Senate Bill 202.2 In

14 addition, each renewable resource must have an expected annual output of at least 70,000

15 megawatt hours after accounting for planned and unplanned outages. PacifiCorp issued a

16 RFP ("2008R RFP") on January 31, 2008 for renewable resources of less than 100 MW (for

I Nameplate capacity or quantity of capacity subject to contract.

2 Utah Senate Bill 202 is new legislation proposed in Utah. A copy is attached asExhibit A for Oregon parties' reference.Page 3 - APPLICATION TO OPEN DOCKET AND REQUEST TO ISSUE SOLICITATION FORINDEPENDENT EVALUATOR

1 resources greater than five years in length) or greater than 100 MW for resources less than or

2 equal to five years in length. The 2008R RFP solicits renewable resources that have a

3 commercial operation date prior to December 31, 2009.

4 7. The 2008R-l RFP will permit qualified bidders to bid qualifying renewable

5 resources in the form of a Power Purchase Agreement, asset transfer arrangements, such as a

6 Build Own Transfer, or other forms of agreements (such as a full or partial facility lease).

7 The Company will not be submitting cost-based benchmark resources; however, PacifiCorp's

8 generation group anticipates submitting one or more self-build ownership alternatives

9 consistent with the process used by third-party bidders.

10 8. In addition to bidding in renewable resources, bidders will have the option to

11 bid in renewable resources coupled with energy storage. Energy storage has the distinct

12 capability of enabling higher penetrations of intermittent renewable energy in the company's

13 portfolio. Pumped water, compressed air, battery storage, or other contractual forms firm

14 intermittent renewable resources and therefore create an energy resource that can be

15 scheduled to better match customer demand or result in a higher degree of dependability

16 throughout a prescribed time period.

17 9. The 2008R-l RFP will not be duplicative of the 2012 RFP (Base Load

18 solicitation) (Docket UM 1208) or the 2008 RFP (Base Load, Intermediate Load, Peak Load

19 solicitation) (Docket UM 1360). The 2008R-l RFP will request renewable resources located

20 in the Western Electricity Coordinating Council that are compliant with existing or

21 anticipated renewable portfolio standards. The 2008R-l RFP is not anticipated to be

22 duplicative with the 2008R RFP unless a bidder has a resource that can reach commercial

23 operation by December 31, 2009 and the bidder elects to bid the same resource in each RFP.

24 The time for submissions of interest and submission of bids published in the 2008R RFP


made it difficult and potentially confusing to bidders to simply modify that RFP. Thus, the

2 Company decided to issue the new 2008R-I RFP. If the same resource is bid in the 2008R

3 RFP and the 2008R-l RFP, each bid will be considered under the terms of the RFP under

4 which the bid is submitted. It is generally expected that wind resources will be the primary

5 resources bid but other forms of renewable resources will be accepted. The Company will

6 further define each such compliant renewable resource in the draft form of the 2008R-1 RFP

7 submitted to the Commission for approval.

8 10. The Company anticipates filing a draft of the 2008R-l RFP by March 31,

9 2008. At that time, PacifiCorp will initiate the process for approval of the 2008R-1 RFP and

10 the periodic update concept introduced in this filing.

11 Request for Solicitation Process for an Independent Evaluator

12 11. With this Application the Company is opening a docket for purposes of its

13 2008R-I RFP. In addition, PacifiCorp has submitted a draft request for proposal for

14 solicitation of an independent evaluator ("IE RFP") and wishes to solicit comments from

15 interested parties on the draft IE RFP no later than March 17, 2008. Following receipt and

16 review of any comments, PacifiCorp will consult with Commission staff on the final IE RFP

17 and plans to file the final IE RFP with the Commission and simultaneously issue it to the

18 market no later than March 21, 2008. PacifiCorp's draft IE RFP is based on the solicitation

19 used for selection of the Oregon IEs for PacifiCorp's 2012 RFP, and incorporates many of

20 the changes contained in Portland General Electric's IE RFP issued October 2, 2007 (Docket

21 No. UM 1345), and supplemented with information specific to PacifiCorp's proposed

22 2008R-l RFP. The draft IE RFP is attached hereto as Exhibit B.


2 12.

Proposed Schedule

To assist parties in understanding the proposed timelines, the Company has

3 included a proposed schedule below.

Event Estimated TimelineRFP for Independent Evaluator issued By March 21,2008Selection of Independent Evaluator April 20082008R-l RFP filed March 31, 20082008R-l RFP approval process completed June 20082008R-1 RFP issued June 20082008R-I RFP responses due August 2008Evaluation completed November 2008Final shortlist filed in Oregon November 2008Oregon Commission acknowledgement of final shortlist December 2008Bidder negotiations completed March 2009Finalize resource decision(s) April 2009Commercial operation Prior to December 31,

2011


WHEREFORE, PacifiCorp respectfully requests that a new docket be opened to

2 process the 2008R-1 RFP and that an order be issued directing the issuance of a request for

3 proposal for selection of an independent evaluator in this docket for purposes of the 2008R-1

4 RFP consistent with the process outlined in this application.

Vice President & General ounsel,Pacific Power

!1A ~led.{11 p.VI I u-p~Natal~OCken ~

DATED: March 4, 2008

Counsel for PacifiCorp

Page 7 - APPLICATION TO OPEN DOCKET AND REQUEST TO ISSUE SOLICITATION FORINDEPENDENT EVALUA TOR

EXHIBIT A

EXCERPT OF UTAH SENATE BILL 202

02-25-08 11:13 AM 1st Sub. (Green) S.B. 202Energy Resource and Carbon Emission Reduction InitiativeState of Utah

592 Section 11. Section 54-17-201 is amended to read:

593 54-17-201. Solicitation process required -- Exception.

594 (1) (a) An affected electrical utility shall comply with this chapter to acquire or

595 construct a significant energy resource after February 25, 2005.

596 (b) Notwithstanding Subsection (l)(a), this chapter does not apply to a significant

597 energy resource for which the affected electrical utility has issued a solicitation before February

598 25, 2005.

599 (2) (a) Except as provided in Subsection (3), to acquire or construct a significant

600 energy resource, an affected electrical utility shall conduct a solicitation process that is

601 approved by the commission.

602 (b) To obtain the approval of the commission ofa solicitation process, the affected

603 electrical utility shall file with the commission a request for approval that includes:

604 (i) a description of the solicitation process the affected electrical utility will use;

605 (ii) a complete proposed solicitation; and

606 (iii) any other information the commission requires by rule made in accordance with

607 Title 63, Chapter 46a, Utah Administrative Rulemaking Act.

608 (c) In ruling on the request for approval of a solicitation process, the commission shall

609 determine whether the solicitation process:

610 (i) complies with this chapter and rules made in accordance wit~Title 63, Chapter 46a,

611 Utah Administrative Rulemaking Act; and

612 (ii) is in the public interest taking into consideration:

613 (A) whether it will most likely result in the acquisition, production, and delivery of

614 electricity at the lowest reasonable cost to the retail customers of an affected electrical utility

1st Sub. (Green) S.B. 202Energy Resource and Carbon Emission Reduction InitiativeState of Utah

02-25-08 11: 13 AM

615 located in this state;

616 (B) long-term and short-term impacts;

617 (C) risk;

618 (D) reliability;

619 (E) financial impacts on the affected electrical utility; and

620 (F) other factors determined by the commission to be relevant.

621 (d) Before approving a solicitation process under this section the commission:

622 (i) may hold a public hearing; and

623 (ii) shall provide an opportunity for public comment.

624 (e) As part of its review of a solicitation process, the commission may provide the

625 affected electrical utility guidance on any additions or changes to its proposed solicitation

626 process.

627 (f) Unless the commission determines that additional time to analyze a solicitation

628 process is warranted and is in the public interest, within [9G] 60 days of the day on which the

629 affected electrical utility files a request for approval of the solicitation process, the commission

630 shall:

631 (i) approve a proposed solicitation process;

632 (ii) suggest modifications to a proposed solicitation process; or

633 (iii) reject a proposed solicitation process.

634 (3) Notwithstanding Subsection (2), an affected electrical utility may acquire or

635 construct a significant energy resource without conducting a solicitation process if it obtains a

636 waiver of the solicitation requirement in accordance with Section 54-17-501.

637 (4) In accordance with the commission's authority under Subsection 54-12-2(2), the

638 commission shall determine:

639 (a) whether this chapter or another competitive bidding procedure shall apply to a

640 purchase of a significant energy resource by an affected electrical utility from a small power

641 producer or cogenerator; and

642 (b) if this chapter applies as provided in Subsection (4)(a), the manner in which this

643 chapter applies to a purchase of a significant energy resource by an affected electrical utility

644 from a small power producer or cogenerator.


02-25-08 11:13 AMEnergy Resource and Carbon Emission Reduction InitiativeState of Utah

1st Sub. (Green) S.B. 202

646 54-17-302. Approval of a significant energy resource decision required.

647 (1) If pursuant to Part 2, Solicitation Process, an affected electrical utility is required to

648 conduct a solicitation for a significant energy resource or obtains a waiver of the requirement to

649 conduct a solicitation under Section 54-17-501, but does not obtain a waiver of the requirement

650 to obtain approval of the significant energy resource decision under Section 54-17-501, the

651 affected electrical utility shall obtain approval of its significant energy resource decision:

652 (a) after the completion of the solicitation process, if the affected electrical utility is

653 required to conduct a solicitation; and

654 (b) before an affected electrical utility may construct or enter into a binding agreement

655 to acquire the significant energy resource.

656 (2) (a) To obtain the approval required by Subsection (1), the affected electrical utility

657 shall file a request for approval with the commission.

658 (b) The request for approval required by this section shall include any information

659 required by the commission by rule made in accordance with Title 63, Chapter 46a, Utah

660 Administrative Rulemaking Act.

661 (3) In ruling on a request for approval of a significant energy resource decision, the

662 commission shall determine whether the significant energy resource decision:

663 (a) is reached in compliance with this chapter and rules made in accordance with Title

664 63, Chapter 46a, Utah Administrative Rulemaking Act;

665 (b) (i) is reached in compliance with the solicitation process approved by the

666 commission in accordance with Part 2, Solicitation Process; or

667 (ii) is reached after the waiver of the solicitation process as provided in Subsection

668 54-17-201(3); and

669 (c) is in the public interest, taking into consideration:

670 (i) whether it will most likely result in the acquisition, production, and delivery of

671 electricity at the lowest reasonable cost to the retail customers of an affected electrical utility

672 located in this state;

673 (ii) long-term and short-term impacts;

674 (iii) risk;

675 (iv) reliability;

676 (v) financial impacts on the affected electrical utility; and


02-25-08 11: 13 AM

677 (vi) other factors determined by the commission to be relevant.

678 (4) The commission may not approve a significant energy resource decision under this

679 section before holding a public hearing.

680 (5) Unless the commission determines that additional time to analyze a significant

681 energy resource decision is warranted and is in the public interest, within [-l-SG] 120 days of the

682 day on which the affected electrical utility files a request for approval, the commission shall:

683 (a) approve the significant energy resource decision;

684 (b) approve the significant energy resource decision subject to conditions imposed by

685 the commission; or

686 (c) disapprove the significant energy resource decision.

687 (6) The commission shall include in its order under this section:

688 (a) findings as to the total projected costs for construction or acquisition of an

689 approved significant energy resource; and

690 (b) the basis upon which the findings described in Subsection (6)(a) are made.

691 (7) Notwithstanding any other provision of this part, an affected electrical utility may

692 acquire a significant energy resource without obtaining approval pursuant to this section if it

693 obtains a waiver of the requirement for approval in accordance with Section 54-17-501.

694 (8) In accordance with Title 63, Chapter 46a, Utah Administrative Rulemaking Act, the

695 commission shall make rules regarding the process for approval of a significant energy

696 resource decision under this section.


698 54-17-303. Cost recovery.

699 (1) (a) Except as otherwise provided in this section, if the commission approves a

700 significant energy resource decision under Section 54-17-302, the commission shall, in a

701 general rate case or other appropriate commission proceeding, include in the affected electrical

702 utility's retail electric rates the state's share of costs:

703 (i) relevant to the proceeding;

704 (ii) incurred by the affected electrical utility in constructing or acquiring the approved

705 significant energy resource; and

706 (iii) up to the projected costs specified in the commission's order issued under Section

707 54-17-302.



708 (b) (0 The commission shall, in a general rate case or other appropriate commission

709 proceeding, include in the affected electrical utility's retail electric rates the state's share of the

710 incremental cost relevant to the proceeding that were prudently incurred by the affected

711 electrical utility to identify, evaluate, and submit a reasonable benchmark option, whether or

712 not the benchmark option is selected or becomes operational.

713 (ii) A recoverable cost under Subsection (l)(b)(i) shall be included in the affected

714 electrical utility's project costs for the purpose of evaluating the project's cost-effectiveness.

715 (iii) A recoverable cost under Subsection (l)(b)(i) may not be added to the cost or

716 otherwise considered in the evaluation of a project proposed by any person other than the

717 affected electrical utility for the purpose of evaluating that person's proposal.

718 [(bj] {£) Except to the extent that the commission enters an order under Section

719 54-17-304, an increase from the projected costs specified in the commission's order issued

720 under Section 54-17-302 shall be subject to review by the commission as part of a rate hearing

721 under Section 54-7-12.

722 (2) (a) Subsequent to the commission issuing an order described in Subsection (2)(a)(i)

723 or (ii), the commission may disallow some or all costs incurred in connection with an

724 approved significant energy resource decision if the commission finds that an affected

725 electrical utility's actions in implementing an approved significant energy resource decision are

726 not prudent because of new information or changed circumstances that occur after:

727 (i) the commission's approval of the significant energy resource decisions under

728 Section 54-17-302; or

729 (ii) a commission order to proceed under Section 54-17-304.

730 (b) In making a determination of prudence under Subsection (2)(a), the commission

731 shall use the standards identified in Section 54-4-4.

732 (3) Notwithstanding any other provision of this chapter, the commission may disallow

733 some or all of the costs incurred by an affected electrical utility in connection with an approved

734 significant energy resource decision upon a finding by the commission that the affected

735 electrical utility is responsible for a material misrepresentation or concealment in connection

736 with an approval process under this chapter.

737 Section 14. Section 54-17-502 is enacted to read:

738 54-17-502. Renewable energy source -- Solicitation -- Consultant.


02-25-08 11:13 AM

739 (1) Sections 54-17-102 through 54-17-404 do not apply to a significant energy resource

740 that is a renewable energy source as defined in Section 54-17-601 if the nameplate capacity of

741 the renewable energy source does not exceed 300 megawatts or, if applicable, the quantity of

742 capacity that is the subject of a contract for the purchase of electricity from a renewable energy

743 source does not exceed 300 megawatts.

744 (2) (a) 0) An affected electrical utility shall issue a public solicitation of bids for a

745 renewable energy source up to 300 megawatts in size by January 31 of each year in which it

746 reasonably anticipates that it will need to acquire or commence construction of a renewable

747 energy resource.

748 Oi) A solicitation for a renewable energy source issued by January 31, 2008 for up to

749 99 megawatts satisfies the requirement of this Subsection (2) for the year 2008 if:

750 (A) not later than 30 days after the day on which this section takes effect, the affected

751 electrical utility amends the solicitation or initiates a new solicitation to seek bids for

752 renewable energy source projects up to 300 megawatts in size; and

753 (B) within 60 days after the day on which this section takes effect and as soon as

754 practicable, the commission retains a consultant in accordance with Subsection (3).

755 (b) A consultant hired under Subsection (2)(a)(ii)(B) shall perform the consultant's

756 duties under Subsection (3) in relation to the status of the solicitation process at the time the

757 consultant is retained and may not unreasonably delay the solicitation process.

758 (c) For a solicitation issued after January 31, 2008:

759 (n the affected electrical utility shall develop a reasonable process for pre-approval of

760 bidders; and

761 Cii) in addition to publicly issuing the solicitation in Subsection (2)(a)0), the affected

762 electrical utility shall send copies of the solicitation to each potential bidder who is

763 pre-approved.

764 Cd) The affected electrical utility shall evaluate in good faith each bid that is received

765 and negotiate in good faith with each bidder whose bid appears to be cost effective, as defined

766 in Section 54-17-602.

767 (e) Beginning on August 1, 2008, and on each August 1 thereafter, the affected

768 electrical utility shall file a notice with the commission indicating whether it reasonably

769 anticipates that it will need to acquire or commence construction of a renewable energy



770 resource during the following year.

771 (3) (a) If the commission receives a notice under Subsection (2)(e) that the affected

772 electrical utility reasonably anticipates that it will need to acquire or commence construction of

773 a renewable energy source during the following year, the commission shall promptly retain a

774 consultant to:

775 (i) validate that the affected electrical utility is following the bidder pre-approval

776 process developed pursuant to Subsection (2)(c) and make recommendations for changes to the

777 pre-approval process for future solicitations;

778 (ii) monitor and document all material aspects of the bids, bid evaluations, and bid

779 negotiations between the affected electrical utility and any bidders in the solicitation process;

780 (iii) maintain adequate documentation of each bid, including the solicitation,

781 evaluation, and negotiation processes and the reason for the conclusion of negotiations, which

782 documentation shall be transmitted to the commission at the conclusion of all negotiations in

783 the solicitation; and

784 (iv) be available to testify under oath before the commission in any relevant proceeding

785 concerning all aspects of the public solicitation process.

786 (b) The commission and the consultant shall use all reasonable efforts to not delay the

787 solicitation process.

788 (4) Documentation provided to the commission by the consultant shall be available to

789 the affected electrical utility, any bidder, or other interested person under terms and conditions

790 and at times determined appropriate by the commission.

791 (5) (a) The commission and the consultant shall execute a contract approved by the

792 commission with terms and conditions approved by the commission.

793 (b) Unless otherwise provided by contract. an invoice for the consultant's services shall

794 be sent to the Division of Public Utilities for review and approval.

795 (cl After approval under Subsection (5)(bl, the invoice shall be forwarded to the

796 affected electrical utility for payment to the consultant.

797 (d) The affected electrical utility may, in a general rate case or other appropriate

798 commission proceeding, include, and the Commission shall allow, recovery by the affected

799 electrical utility of any amount paid by the affected electrical utility for the consultant.

800 (6) (a) Nothing in this section precludes an affected electrical utility from constructing

1st Sub. (Green) S.B. 202Energy Resource and Carbon Emission Reduction InitiativeState ofUtah

02-25-08 11:13 AM

801 or acquiring any renewable energy source project outside the solicitation process provided for

802 in this section, including purchasing electricity from any renewable energy source project that

803 chooses to self-certify as a qualifying facility under the federal Public Utility Regulatory

804 Policies Act of 1978.

805 eb) An affected electrical utility that constructs a renewable energy source outside the

806 solicitation process of this section or Section 54-17-201 shall file a notice with the commission

807 at least 60 days before the date of commencement of construction, indicating the size and

808 location of the renewable energy source.

809 ec) The date of commencement of construction under Subsection (6)(b) is the date of

810 any directive from an affected electrical utility to the person responsible for the construction of

811 the renewable energy source authorizing or directing the person to proceed with construction.

812 Cd) For an affected electrical utility whose rates are regulated by the commission, the

813 utility has the burden of proving in a rate case or other appropriate commission proceeding the

814 prudence, reasonableness, and cost-effectiveness of construction under this Subsection (6),

815 including the method used to evaluate the risks and value of any bid submitted in the

816 solicitation under this section.

817 (7) Nothing in this section requires an affected electrical utility to enter into any

818 transaction that it reasonably believes is not cost effective or otherwise is not in the public

819 interest.

820

EXHIBITB

DRAFT INDEPENDENT EVALUATOR REQUEST FOR PROPOSAL

PacifiCorp's

Request for Proposals ("RFP")for

Independent Evaluator for PacifiCorp'sRenewable Request for Proposal

Proposals Due:

Issuing Entity:

Contact:

Telephone:Fax:

April 4, 20084:00 PM Pacific Standard Time

PacifiCorp

Stacey Kusters

(503) 813-5351(503) 813-6260

Page 1 of 36

Table of Contents

I. INTRODUCTION 4

A. Purpose 4B. Background 4C. Contract Term and Amendments 5D. Estimated Schedule of Events 5E. OPUC Contacts 5F. Reservation of Rights 5G. Solicitation Addenda 6H. Proprietary Information 6

II. SCOPE OF WORK 7

A. Deliverables 7B. Other Activities 9

III. PACIFICORP'S RFP SCHEDULE TIMELINE 11

IV. MANDATORY MINIMUM QUALIFICATIONS 12

V. PROPOSAL CONTENTS 12

A. Qualifications 12B. Proposer Staff Organization 12C. Required Submittals 13D. Cost Proposal Requirements 13

VI. PROPOSAL REQUIREMENTS 14

VII. SCORING CRITERIA 14

A. Understanding of the Scope of Work 14B. Demonstrated Ability of Proposer to Perform the Proposed Work 15C. The Soundness, Professionalism and Feasibility of the Proposer's Methodology 15D. Price Proposal 15

VIII. PROCESS FOR SELECTION 15

A. Evaluation 15B. Selection Notification 16

Page 2 of36

IX. CONTRACT INFORMATION 16

A. Professional Services Contract 16

ATTACHMENT A (Pricing Page) 17

ATTACHMENT B (Draft Copy PacifiCorp Professional Services Contract) 19

ATTACHMENT C (UM 1182 Competitive Bidding Guidelines) 35

Page 3 of36

I. INTRODUCTION:

PacifiCorp is seeking to acquire up to 500 megawatts of renewable resources with a commercial operationdate of no later than December 31, 2011 through its 2008R-1 Renewable C2008R-1") Request for ProposalsCRFP"). 2008R-l RFP will solicit system wide (east and west) renewable resources new to theCompany's portfolio and which are capable of delivery in or into PacifiCorp's network transmissionsystem, or another PacifiCorp prescribed point(s) that enables PacifiCorp to meets its obligations, withinthe prescribed time period. The 2008R-l RFP will permit qualified bidders to bid qualifying renewableresources in the form of a Power Purchase Agreement, asset transfer arrangements (such as a Build OwnTransfer) or some other form of agreement (such as a full or partial facility lease). The Company will notbe submitting cost-based benchmark resources; however, PacifiCorp's generation group, anticipatessubmitting one or more self-build ownership alternatives consistent with the process used by third-partybidders and if regulatory treatment of such an alternative, if chosen, is acceptable to the Company. Inaddition to bidding in renewable resources, bidders will have the option to bid in renewable resourcescoupled with energy storage. Pumped water, compressed air, battery storage, or other contractual formsthat can firm intermittent renewable resources and therefore create an energy resource that can bescheduled to better match customer demand or result in a higher degree of dependability throughout aprescribed time period. The 2008R-l RFP will request renewable resources located in the WesternElectricity Coordinating Council that are compliant with existing or anticipated renewable portfoliostandards.

A. Purpose.

The purpose of this solicitation is to assist Public Utility Commission of Oregon ("Commission") Staff inrecommending an Oregon Independent Evaluator ("IE") for PacifiCorp's 2008R-1 RFP for theCommission's consideration. PacifiCorp will contract directly with the Commission-selected IE. (SeeAttachment B / Draft Copy PacifiCorp Professional Services Contract)

The IE must be independent of the utility and potential bidders, and also be experienced and competent toperform all IE functions identified in the competitive bidding guidelines.

B. Background.

The Commission recently issued updated guidelines on competitive bidding. See Order No. 04-446 athttp://apps.puc.state.or.us/orders/20060rds/06%2D446.pdf. The 2008R-l RFP is subject to the updatedguidelines. The guidelines are also attached to this RFP as Attachment C. The proceeding is docketed as UMXXXXXX. See http://apps.puc.state.or.us/edockets/docket.asp?DocketID=12698.

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Guideline No. 7 lays out three criteria for RFP approval: (1) the alignment of the utility's RFP with itsacknowledged Integrated Resource Plan ('·IRP"); (2) whether the RFP satisfies the Commission'scompetitive bidding guidelines; and (3) the overall fairness of the utility's proposed bidding process.

Regarding the first criteria, PacifiCorp's mo~t~~~~ntl)1 acknowledged IRP is at [InsertI..Ji~]. TheCommission's acknowledgment order is at [In.s(P.rtLillk]

Regarding the second and third criteria, Guideline 10 lays out the general role of the IE: "The IE willoversee the RFP process to ensure that it is conducted fairly and properly...." See Guidelines 6, 7, 8,9, 10, 11 and 13 for the IE's duties in more detail. Guideline 5 lays out the IE selection andcontracting process.

C. Contract Term and Amendments.

The Contract is anticipated to be for an initial term of ten (10) months, with the option to renew on amonth to month basis until the IE's participation in the 2008R-1 RFP process is completed. The IE mustbe available according to the schedule established by the Commission.

D. Estimated Schedule of Events.

Release Independent Evaluator RFP March 21, 2008Inquiry Deadline March 28 ,2008Inquiry Response Date April 4, 2008Commission Staff Report recommending IE selection posted athttp://www.puc.state.or.us/PUC/meetings/index.shtml April XX, 2008Commission issues order selecting Oregon IndependentEvaluator and directing PacifiCorp to contract with the selected IEas soon as reasonably possible April "X"X, 2008

NOTE: All dates are subject to change.

E. OPUC Contacts.

Contact:

Mailing Address:

Telephone:

Public Utility Commission of OregonP. O. Box 2148Salem, OR 97308-2148

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Fax:

F. Reservation of Rights.

PacifiCorp reserves the right in its sole discretion to:

1. Amend this RFP for any reason or cancel this solicitation without liability if cancellation wouldbe in the public interest;

2. Reject any or all Proposals received in response to this RFP, without liability, if such rejectionwould be in the public interest. PacifiCorp is not responsible for any costs incurred by Proposer inconnection with submitting Proposals, and all Proposers who submit a Proposal do so solely at their ownexpense;

3. Waive any minor irregularity, informality, or non-conformance with the provisions orprocedures set forth in this RFP, and to seek clarification of each Proposal if necessary;

4. Contact any or all references submitted with the Proposal.

G. Solicitation Addenda.

PacifiCorp may revise this RFP prior to the RFP closing date. PacifiCorp will not waive, alter, modify,supplement or amend the terms of this RFP in any manner except by written addenda issued byPacifiCorp in the same manner as the original RFP was advertised. Any purported changes, additions,interpretations or clarifications to the RFP that are issued in any manner other than as described abovewill not be effective, and Proposer shall not rely upon such information.

H. Proprietary Information.

1. All information submitted by a Proposer will be considered public information unless the Proposerrequests that information be treated as confidential, and the information is considered exempt under ORS192.501 or 192.502. If a Proposer declares any information contained in its bid submittal to be confidential,the Proposer must specifically identify those sections containing as "Confidential Information" and brieflyexplain how and why the information is exempt from disclosure to the public pursuant to ORS 192.501 or192.502. Specifically, any documents submitted and any documents exchanged between the parties thatcontain Confidential Information shall be marked on the outside as containing Confidential Information, andeach page upon which Confidential Information appears must be marked as containing ConfidentialInformation. The Confidential Information should be clearly identifiable to the reader wherever it appears.

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All copies submitted, as well as the original proposal, must be marked in this manner. The request must alsoinclude the name, address, and telephone number of the person authorized by the Proposer to respond to anyinquires by PacifiCorp concerning the confidential status of the materials. PacifiCorp agrees to treat suchinformation as confidential and to submit such information to the Commission, or commissions, and otherparties pursuant to a protective order.

2. In addition, Proposer agrees that certain Commission-authorized entities must be allowed to reviewsuch materials.

II. SCOPE OF WORK:

A. Deliverables

1. IE Assessment of RFP Design

Due two weeks after PacifiCorp files its final draft RFP. See Guideline 6. The assessment should takeinto account the Commission's goals (page 2 of the order) and the three criteria for RFP approval(Guideline 7) m:~~ge~~~~~ll~~~~J:~~~ Guidelines 6, 7, 8, 9, 10, 11 and 13, as well as issues raised byparties in UM [1-p:s~tt'ID;)~y]{~t'N'llQlP~:r]. The assessment should address the evaluation criteria, methodsand computer models as well as the pro forma contracts included with the 2008R-l RFP. The assessmentalso should review the adequacy, accuracy and completeness of all solicitation materials to ensurecompliance with the Commission's competitive bidding order and consistency with accepted industrystandards and practices.

2. Status Reports - To be filed with the Commission:

1. Twenty-one calendar days after bidder eligibility screening is completed, noting any unresolvedissues that could impair the equity or appropriateness of the solicitation process and including issueswhich are raised at the pre-bid conference.

ii. Twenty-one calendar days after PacifiCorp selects its initial short-list, detailing the results ofPacifiCorp's initial screening evaluation. Include a description of the bids and provide an assessmentof the company's selection of the initial short-list, including rationale for eliminating bids. This statusreport will be provided to the Commission under seal or on a highly confidential basis.

3. IE Closing Report

Due 21 calendar days after PacifiCorp has selected the final short-list of bids (before anyacknowledgment proceeding on the final short-list of bids). As part of the Closing Report, the IE willmake its detailed bid and evaluation results available to the utility, Commission staff and non-bidding parties in UM subject to the terms of a protective order. See Guideline

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11. The Closing Report will provide the IE's detailed assessment of the company's selection of the finalshort-list ofbids, including all aspects of the solicitation process and the IE's involvement, observations,conclusions and recommendations. The reasons and basis for a) ranking bids and Benchmark Resources,b) selecting a market bid or Benchmark Resource, and c) rejecting proposals or Benchmark Resources areto be fully detailed in the Closing Report.

The Closing Report will also include an analysis of whether or the extent to which: 1) the resourcesselected minimize long-term costs for PacifiCorp's retail customers taking into consideration overallsystem costs and risks, 2) the solicitation process was fair, 3) PacifiCorp's ownership options wereconsidered and evaluated consistent with the Commission's competitive bidding guidelines, 4) screeningfactors and weights were applied consistently and comparably to all market bids and ownership options,5) credit and security requirements, liquidated damages provisions, warranties and other similarrequirements were appropriately applied to bid evaluation and appropriately affected the outcome of thesolicitation process, 6) all reasonably available data and information necessary in order for a potentialbidder to submit a bid was provided, 7) the IE was provided with or given access to all data, informationand models relevant to the solicitation process in order to permit full and timely scoring, testing andverification of assumptions, models, inputs, outputs, and results, 8) confidentiality claims and concernsbetween the IE and PacifiCorp were resolved in a manner that preserved confidentiality as necessary, yetpermitted dissemination and consideration of all information reasonably necessary for the biddingprocess to be conducted fairly and thoroughly, and 9) the evaluation was performed consistent withCommission-approved competitive bidding guidelines.

The report also will include results from tasks listed below and from Guidelines 1OCd) and 1O(e) of OrderNo. 06-446:

a. Scores for bids - The IE's independent scoring of all or a sample of the bids, includingPacifiCorp's ownership options, to determine whether the selections for the initial and finalshort-lists are reasonable.

b. Evaluation of risks and disadvantages of ownership options - The IE's independentevaluation of the unique risks and advantages associated with the ownership options,including the regulatory treatment ofcosts or benefits related to actual construction cost andplant operation differing from what was projected for the RFP.

c. Comparison of utility and IE scores - Comparison between PacifiCorp' s and the IE'sscoring and evaluation of the competing bids and ownership options, following a meeting(s)with PacifiCorp to attempt to reconcile and resolve any scoring differences. Include anexplanation of the reconciliation process and any remaining differences.

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In the Closing report, the IE will be required to disclose any conflict of interest regarding any ofthe actual bidders.

B. Other Activities"

1. Confer with Commission Staff as needed on the IE's duties - See Guideline 5. May be performed inperson, by phone or by e-mail.

2. In consultation with Commission Staff, participate in additional meetings with parties, hosted byStaff, related to final short-list selection or any request for acknowledgment of final short-list.

3. Participate in the pre-bid conference (anticipated 15 days after RFP issuance) and make a presentationto communicate the IE role in the process. Participate in any additional pre-bid conferences.

4. Review PacifiCorp's screening process for bidder eligibility.

5. Participate in a Commission public meeting (if any) to review the Commission's decision on RFPapproval, based on the IE's assessment of the Renewable RFP design.

6. Monitor all aspects of the solicitation process through the acknowledgment process for the final shortlist of bids, including the following:i. Submission of detailed scores for ownership options to the IE and Commission prior to the

opening of bidding11. Bidder eligibility screening111. Communications between Proposer and PacifiCorp before and after proposals are dueIV. Any requested bidder updates (along with any updates to ownership options)v. Any RFP amendments issued by PacifiCorpvi. Evaluation and ranking of responsesvii. Selection of the initial short-list of bidsviii. Selection of the final short-list of bids

7. Audit the evaluation process and validate that evaluation criteria, methods, models, and othersolicitation processes have been applied as approved by the Commission and consistently andappropriately applied to all bids and ownership options. Verify assumptions, inputs, outputs andresults are appropriate and reasonable.

8. Verify the basis for selection of the initial short-list of bids (See Guideline 9(a))

* Meetings with staff to occur in Salem, Ore.; meetings with PacifiCorp to occur in Portland, Ore.

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1. Verify that the price score is calculated as the ratio of the bid's projected total cost per megawatthour to forward market prices, using real-levelized or annuity methods.

11. Verify that the non-price score is based on resource characteristics identified in PacifiCorp'sacknowledged IRP Action Plan (e.g., dispatch flexibility, resource term, portfolio diversity, etc.)and conformance to the standard form contracts attached to the RFP. (Note: The utility mustallow bidders on the final short-list to negotiate mutually agreeable final contract terms that aredifferent from ones in the standard form contracts. See Guideline 6.)

9. Verify the basis for selection of the final short-list of bids (See Guideline 9(b))i. Verify the results of modeling the effect of candidate resources on overall system costs and risks.ii. Verify that the portfolio modeling and decision criteria used to select the final short-list of bids

are consistent with the modeling and decision criteria used to develop PacifiCorp's acknowledgedIRP Action Plan.

10. Advise PacifiCorp and Commission Staff of any issue that might reasonably be construed to affectthe integrity of the solicitation process and provide PacifiCorp an opportunity to remedy the defectidentified. Advise Commission Staff of significant changes or unresolved issues as they arise.

11. Independently score the ownership options and all or a sample of the market bids to determinewhether the selections for the initial and final short-lists are reasonable. Based on an initial sample ofmarket bids, the IE should use its judgment regarding whether independent scoring of all bids isappropriate, in consultation with Commission staff.

12. Independently evaluate the unique risks and advantages associated with the ownership options,including the regulatory treatment of costs or benefits related to actual construction cost and plantoperation differing from what was projected for the RFP.

13. Compare the IE's and PacifiCorp's scoring and evaluation ofthe competing bids and ownershipoptions and attempt to reconcile and resolve any scoring differences.

14. Participate in Commission proceedings on acknowledgment of the final short-list of bids, ifPacifiCorp requests such acknowledgment ~ See Guideline 13. Participation would include oralcomments at a Commission public meeting or hearing.

15. Participate in any additional meetings with parties on request.

III. PACIFICORP'S RFP SCHEDULE TIMELINE

• June 2008 (date TBD) - PacifiCorp issues 2008R-l RFP

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• 15 days from issuance - RFP bidder conference

• 30 days from issuance - Intent to Bid form due

• 75 days from issuance - Bidder responses due

• 150 days from issuance- PacifiCorp's evaluation is complete

• TBD - Commission consideration of acknowledgment ofPacifiCorp's final short-list of bids

• TBD - PacifiCorp's negotiations with bidders completed

IV. MANDATORY MINIMUM QUALIFICATIONS:

In the above referenced Order No. 04-446, the Commission directed that the IE must be independent of theutility and potential bidders. The following are minimum requirements that must be demonstrated byProposers:

• Proposer shall be experienced and competent to perform all IE functions identified in thecompetitive bidding guidelines.

• Proposer shall disclose all business conducted with PacifiCorp or its affiliates', past or present.• Proposer shall re-confirm, upon receipt of the bidder list, that Proposer has no conflict of interest

with any of the bidders or their affiliates.• Proposer shall disclose any conflict, or potential conflict of interest, that might arise during the

course of the project, including any potential bidders in PacifiCorp's 2008R-l RFP.• Proposer shall demonstrate its experience and competence in assessment, evaluation and

monitoring related to competitive bidding for electricity supplies.• The Oregon IE should perform its duties independently of any consultant hired by the Public

Service Commission of Utah. However, the Oregon IE should work with Commission Staff andPacifiCorp to coordinate activities for administrative efficiency.

V. PROPOSAL CONTENTS:

Proposer must include the following in the Proposal:

1 Unless directed by the Commission otherwise, a PacifiCorp "affiliate" shall be limited to MidAmerican Energy HoldingsCompany and its subsidiaries.

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A. Qualifications.

Proposer shall provide all information deemed necessary to fully demonstrate the Proposer'squalifications as required under Article IV.

B. Proposer Staff Organization.

Each Proposal shall explain the Proposer's staff organization and responsibility hierarchy of staff to beassigned to the 2008R-IRFP review. Such assignments and responsibilities shall be broken down anddescribed by task. Proposer shall highlight illustrations of relevant prior experience on similar projects.

c. Required Submittals.

1. Detailed response containing:a. A complete narrative of the Proposer's assessment of the work to be performed, the Proposer's ability

and approach, and the resources necessary to fulfill the requirements. This should demonstrate theProposer'sunderstanding of performance expectations. Clearly indicate any options or alternativesproposed.

b. A specific point-by-point response by task number (e.g., "AI"), in the order listed in the DetailedScope of Work, to each requirement in the RFP.

c. Cost proposal - All-inclusive fixed costs for each task in the Detailed Scope of Work by pricing area,as specified in Attachment A.

2. Qualification and expertise of staffproposed for this project.3. Experience and competence in assessment, evaluation and monitoring related to competitive bidding for

renewable resource supplies. Specifically, experience with assessing and evaluating renewable resourceslocated in the Western Electricity Coordinating Council, including experience with market bids andutility self-build proposals. Such experience should include evaluating power supply alternativesincluding production cost modeling to evaluate cost and risk.

4. Demonstrated knowledge ofexisting or anticipated renewable portfolio standards.5. Work samples demonstrating such expertise and competence, including work samples demonstrating

the Proposer's willingness and ability to work independent of utilities and to rigorously review,evaluate and critique utility RFPs for energy resources.

6. Performance references for similar projects.7. Conflict of interest declaration - Identify any conflict, or potential conflict of interest, that might arise

during the course of the project.8. Disclose any past, current or anticipated future relationship with or work for PacifiCorp, any PacifiCorp

affiliate, and any public utility regulatory agency in any of the states served by PacifiCorp. Thisdisclosure should specify the date, nature and scope of any such relationship or work.

Note: An oral presentation by a bidder to clarify a proposal may be required.

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D. Cost Proposal Requirements:

The information requested in this section will be used by the PUC to evaluate the reasonableness of theoverall project quotation. The Proposer must estimate the major cost categories and hours associated witheach task. As a minimum requirement, each Proposal shall contain the following:

• Personnel costs, itemized and broken down by: (a) personnel category (i.e. project manageretc.), (b) names of personnel in each category to be used, (c) estimated hours for each task,(d) rates per hour for each person, and (e) subtotal for personnel cost.

• Itemized cost of materials, supplies and copies and a subtotal for these elements.

• Fully itemized transportation and related costs, itemized and broken down by at least: (a)travel, (b) lodging, (c) meals and other costs, and (d) a subtotal for transportation andrelated costs.

VI. PROPOSAL REQUIREMENTS:

Five copies (5) of each Proposal, one (1) of which must bear the original signature, must be received nolater than 4:00 PM Pacific Standard Time on Friday, April 4, 2008. Proposals received after this timeand date will not be accepted. PacifiCorp also requests that a copy be submitted electronically (suggestedvia PDF in email or on CD).

Proposals shall be addressed as follows:

Stacey KustersPacifiCorp825 NE Multnomah, Suite 600Portland, OR 97232Telephone: (503) 813-5351Fax: (503) [email protected]

Each Proposal shall be in the format outlined in this section. Each Proposal shall be submitted preparedon standard 8 1/2 inch by 11 inch recycled paper, duplex printed (2 sided). Each Proposal shall be stapledor bound separately. THE PROPOSAL MUST BE ORGANIZED IN THE SAME ORDER AS THEINFORMATION IS REQUESTED IN THIS RFP. PacifiCorp may reject any Proposal that fails tofollow these instructions.

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VII. SCORING CRITERIA:

From the information submitted in accordance with Article V, Proposal Contents, and client references,the Evaluation Committee (see Article VIII) will score Proposals based upon the following:

A. Understanding of the Scope of Work.

A maximum of one hundred (l00) points are assigned to this section. Understanding of the scope of workand the Deliverables that will meet it including, but without limitation:

1. The Proposer's description of the tasks in its Deliverables (50 points)

2. Whether the Proposer appears to have sufficient knowledge and understanding of the functionsto be performed. (50 points).

B. Demonstrated Ability of Proposer to Perform the Proposed Work.

A maximum of three hundred (300) points are assigned to this section. Demonstrated training, experienceand ability of the Proposer and its individual staffmember(s) that will be assigned to the project toperform the proposed work, including, but without limitation:

1. Specific experience reviewing an RFP for renewable resources in the Western ElectricCoordinating Council, including experience with evaluating market bids and utility self-buildproposals. (200 points)

2. Experience evaluating another type of Electricity Resource RFP or other related experience.(100 points)

C. The Soundness, Professionalism and Feasibility of the Proposer's Methodology.

A maximum of two hundred (200) points are assigned to this section. The soundness, professionalismand feasibility of the methods and techniques which shall include data collection, data analysis, projectmanagement and planning.

D. Price Proposal.

A maximum of four hundred (400) points are assigned to this section. The cost of the project, the overallelements of that cost and the overall appropriateness of the cost in relation to the project as proposed.(Attachment A).

1. The cost of the proj ect, the overall elements of that cost. (200 points)

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2. The overall appropriateness of the cost in relation to the project as proposed. (200 points)

VIII. PROCESS FOR SELECTION:

A. Evaluation.

1. Initial Review: PacifiCorp and Commission staff will review all Proposals to ensure that all prescribedprovisions and procedures have been met. Proposals that do not meet all prescribed MandatoryQualifications, solicitation procedures and requirements may be rejected and eliminated from theselection process. Proposals meeting the prescribed solicitation procedures and requirements will beforwarded to an Evaluation Committee composed of Commission staff, PacifiCorp and interested nonbidding parties.

2. Evaluation Committee Process: Each member of the Evaluation Committee will independently reviewand score each Proposal. After each member of the Evaluation Committee has reviewed and scoredeach Proposal, the Evaluation Committee will meet to discuss their findings and develop consensusscores for each Proposal based on criteria listed above.

3. Scoring: The entity or individual submitting the highest scoring Proposal shall be recommended tothe Commission for its consideration.

4. Recommendation to Commission: Staff will issue a Report for the Commission Public Meeting onUlp.~~~m~~t~m, with its recommendation for an Oregon IE for PacifiCorp.

5. Commission's ultimate discretion in selecting IE: The Commission will consider staffsrecommendation and comments from PacifiCorp, non-bidding parties in selecting the IE, but theultimate discretion to select an IE lies with the Commission. The Commission will direct PacifiCorpto enter into a contract with the selected IE.

B. Selection Notification.

PacifiCorp will notify every Proposer of its selection status.

IX. CONTRACT INFORMATION:

A. Professional Services Contract.

1. The selected Proposer will be required to enter into a professional services contract with PacifiCorpbased on the scope of work described herein and in a form substantially similar to the form attached to

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this RFP. Commission Staff will review the draft PacifiCorp Contract prior to execution to ensurethat it conforms to this solicitation.

2. The State of Oregon will not be a party to the resulting contract, and will not be responsible for anyconflicts that arise between PacifiCorp and the selected IE.

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Attachment AScope of Work and Pricing

Oregon Independent Evaluator for PacifiCorp's 2008R-1 Request for Proposal

Proposer Name: _

Address:

Phone:

Fax:

Email:

Pricing for this RFP shall be defined into four areas. Proposer shall provide fixed pricing by area.

ALL PRICING SHALL BE FIXED.

Area One: IndependentEvaluator Assessment of PacifiCorps RFP;!esignRe: Deliverable A-1 ..

$-----

Area Two: Reports, Scores, Evaluations, Presentations $ _Re: Deliverables

A-2 Status ReportsA-3 IE Closing ReportB-1, 2, 3, 5, 8, 9 and 10. Participate in activities, confer with Commission Staff andPacifiCorp, and attend Commission meetings and present information as required.

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Area Three Pricing to be calculated based on quantity of bids received by PacifiCorp.

Area Three: PacifiCorp RFP ScoringRe: Deliverables

B-4 Review Bidder eligibility screeningB-6 Monitoring of solicitation processB-7 Audit evaluation processB-11 Independently score market bids and ownership optionsB-12 Independently evaluate risks of ownership optionsB-13 Compare IE and PacifiCorp scoring

Quantity of Bids (Provide fixed pricing for each quantity of bids, below)

One to Twenty $

Twenty-One to Forty $

Forty-One to Sixty $

Sixty-One to Eighty $

Eighty-One to One hundred $

Area Four: A separate cost proposal must be provided for each of the following conditional tasks.

B-14 Participate in Commission proceeding on acknowledgment of final short-list

$-----

B-15 Participate in additional meetings with parties (cost per meeting) $ _

Pricing will be scored by the Evaluation Committee based on aggregate total of Area One, Area Two, andeach item under Area Three and Area Four.

Pricing shall account for 40 % of overall score for each Proposal.

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Attachment BDraft Copy

Pacifi Corp Professional Services Contract

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PROFESSIONAL SERVICES CONTRACT

BETWEEN

PACIFICORP

AND

FOR

AT

TABLE OF CONTENTS

ARTICLE 1. DEFINITIONS

ARTICLE 2. DESCRIPTION OF WORK

ARTICLE 3. PERIOD OF PERFORMANCE

ARTICLE 4. CONSIDERATION AND PAYMENTS

ARTICLE 5. TAXES

ARTICLE 6. ACCOUNTING AND AUDITING

ARTICLE 7. CREDIT REQUIREMENT

ARTICLE 8. SECURITY

ARTICLE 9. WITHHOLDING PAYMENT

ARTICLE 10. DESIGNATED REPRESENTATIVE AND NOTICES

ARTICLE 11. SAFETY AND SITE REGULATIONS

ARTICLE 12. EXAMINATION OF WORK AND PROGRESS REPORTS

ARTICLE 13. PROFESSIONAL RESPONSIBILITY

ARTICLE 14. CHANGES

ARTICLE 15. WORKERS' COMPENSATION

ARTICLE 16. INSURANCE

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PAGE23

23

24

24

24

24

24

25

25

25

26

26

26

26

27

27

ARTICLE 17. INDEMNIFICATION 28

ARTICLE 18. CONSEQUENTIAL DAMAGES 28

ARTICLE 19. CONSULTANT'S PERSONNELIDRUGS, ALCOHOL AND FIREARMS 28

ARTICLE 20. LABOR 28

ARTICLE 21. PROTECTION OF EXISTING FACILITIES 29

ARTICLE 22. PROGRESS MEETINGS 29

ARTICLE 23. LAWS AND REGULATIONS 29

ARTICLE 24. INDEPENDENT CONTRACTOR 29

ARTICLE 25. COOPERATION WITH OTHERS 29

ARTICLE 26. LIENS 29

ARTICLE 27. CONFLICTS, ERRORS, OMISSIONS, OR DISCREPANCIES IN CONTRACTDOCUMENTS 30

ARTICLE 28. CLAIM NOTICE AND RESOLUTION PROCEDURE 30

ARTICLE 29. SUSPENSION OF WORK 30

ARTICLE 30. TERMINATION FOR CONVENIENCE 30

ARTICLE 31. TERMINATION FOR CAUSE 30

ARTICLE 32. DELAYS 32

ARTICLE 33. EQUAL EMPLOYMENT OPPORTUNITY AND OTHER NONDISCRIMINATIONCLAUSES 32

ARTICLE 34. RELEASE OF INFORMATION - ADVERTISING AND PROMOTION 32

ARTICLE 35. CONFIDENTIAL INFORMATION NONDISCLOSURE 32

ARTICLE 36. OWNERSHIP OF DESIGNS, DRAWINGS AND WORK PRODUCT 33

ARTICLE 37. PATENT AND COPYRIGHT INDEMNITY 33

ARTICLE 38. NONEXCLUSIVE RIGHTS 33

ARTICLE 39. ASSIGNMENT 33

ARTICLE 40. SUBCONTRACTS 34

ARTICLE 41. NONWAIVER 34

ARTICLE 42. SEVERABILITY 34

ARTICLE 43. APPLICABLE LAW AND VENUE 34

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ARTICLE 44. ENTIRE AGREEMENTIDOCUMENTS INCORPORATED BY REFERENCE 34

ARTICLE 45. EXECUTION AND EFFECTIVE DATE 35

Exhibit X, Letter of Credit Terms

Exhibit X, Third Party Guaranty

Exhibit X, Surety Bond

Exhibit X, Labor and Material Payment Bond

Exhibit X, Scope ofWork

Exhibit X, Pricing Schedule

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PROFESSIONAL SERVICES CONTRACT

BETWEEN

PACIFICORP

AND

FOR

AT

PARTIES

The Parties to this Contract are PACIFICORP (hereinafter "Company") whose address is 825 NE Multnomah

Street, Portland, Oregon 97232 and (hereinafter "Consultant") whose address is

ARTICLE 1. DEFINITIONS

Defined Terms:

Emergency shall be defined as conditions under which, without effecting an immediate repair: life, health or safetywould be endangered by operation of the facilities; the facility would be unavailable for commercial use; or the facilitycould not be operated, or demonstrated to be operating, in compliance with environmental regulations.

Material Adverse Change "MAC" shall mean, with respect to the Consultant, if the Consultant, in the reasonableopinion of Company, has experienced a material adverse change in the ability to fulfill its obligation under thisContract, including, but not limited to, any such change that results in its inability to satisfy ARTICLE, CREDITREQUIREMENTS, ARTICLE, SECURITY, including any event or circumstance that would give Company theright to terminate for cause pursuant to ARTICLE, TERMINATION FOR CAUSE

Scope of Work shall be defined as

Service(s) shall mean any labor, skill or advice provided to Company pursuant to this Contract.

Subcontractor shall mean any individual, firm, partnership, corporation or contractor, at any tier, having an agreementwith Consultant to perform a portion of Consultant's obligations under this Contract.

Work as used herein, shall mean all obligations, duties, requirements, and responsibilities required for the successfulcompletion of the Contract by Consultant, including furnishing of all products and/or Services (supervision, labor,materials, equipment and other supplies, etc., in addition to obtaining all licenses and permits), in accordance with theterms and conditions set forth herein and inclusive of those detailed herein.

Workers' Compensation Laws shall be defined as the statutory requirements of the state and/or federal regulations(e.g., FELA, USL&H, Jones Act) where the Work is to be performed.

Work Site shall mean the location or locations where the Work is to be performed or Service is to be provided.

ARTICLE 2. DESCRIPTION OF WORK

Consultant shall perform the Work as required in Exhibit A, "Scope of Work", attached hereto and by thisreference incorporated herein.

Except as otherwise provided in this Contract, Consultant shall furnish all supervision, labor, equipment, andmaterials, and shall obtain all licenses and permits required for the performance of such Work. Consultant shall alsobe solely responsible for the means, methods, and procedures of performing the Work.

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ARTICLE 3. PERIOD OF PERFORMANCE

Time is of the essence. Consultant shall commence performance onlater than

ARTICLE 4. CONSIDERATION AND PAYMENTS

and shall camp lete the Work no

As full consideration for the satisfactory performance of Consultant's obligations under this Contract,Company will pay Consultant within thirty (30) calendar days upon receipt of invoice in strict accordance withExhibit B "Pricing Schedule", attached hereto and by this reference incorporated herein.

Consultant shall submit an invoice for payment for Services received under this Contract. All invoices shallreference the applicable Contract number. Company will pay all undisputed invoice amounts within thirty (30)calendar days of receipt of a proper invoice and Company's acceptance of the Work.

All invoices shall be addressed as follows:

PacifiCorp

Attn:

INVOICES WHICH DO NOT CONTAIN THE ABOVE INFORMATION, OR ARE NOTADDRESSED AS ABOVE, MAY CAUSE PAYMENT DELAY.

Company may offset any such payment to reflect amounts owing from Consultant to Company or its subsidiariespursuant to this Contract or any other agreement between the parties or otherwise. In addition, Company may withholdall payments otherwise due Consultant until such time as Consultant has provided the Letter of Credit required bythis Contract.

Upon request by Company, Consultant shall also provide lien and claim releases executed by Consultant, itsSubcontractors and their suppliers through the date of each invoice submitted.

ARTICLE 5. TAXES

The consideration as stated in ARTICLE, CONSIDERATION AND PAYMENTS includes all taxes to beborne by Company arising out of Consultant's performance hereunder including, without limitation, sales, use, andvalue-added taxes. State and local sales and use taxes shall be stated separately and shown on all invoices as aseparate line item. Upon request of Company, Consultant shall promptly provide to Company evidence of paymentof all state and local sales, use, and value-added taxes.

ARTICLE 6. ACCOUNTING AND AUDITING

Consultant shall keep accurate and complete accounting records in support of all cost billings and claims toCompany in accordance with generally recognized accounting principles and practices. Company, or its auditrepresentatives, shall have the right at any reasonable time or times to examine, audit and copy the records,vouchers, and their source documents which serve as the basis for compensation other than pricing elements whichare fixed in amount by this Contract. Such documents shall be available for examination, audit, and copying forthree (3) years after the completion or termination of this Contract.

Consultant shall assist Company with preparing necessary audit material and will allow Company to review anywork papers prepared by independent auditors as allowed by professional standards.

Audit findings by Company's representative will be considered to be final and conclusive on Consultant for theperiod audited. Any over collections shall be returned to Company within thirty (30) calendar days from date ofnotice of overcharge.

ARTICLE 7. CREDIT REQUIREMENT

Consultant shall meet the requirements of anyone or more of clause (i), clause (ii), or clause (iii) below: (i)Consultant maintains a senior unsecured debt rating from Standard & Poor's ofBBB- or better; (ii) if Consultant hasno debt rating, Consultant meets ALL of the following credit standards: a) tangible net worth ten (10) times the

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projected maximum exposure under this Contract, b) no change in the condition of its earnings, net worth, orworking capital over the last 24 months which would reasonably be anticipated to impair the Consultant's ability tomeet its obligations under this Contract, and c) Consultant is not in default under any of its other agreements and iscurrent on all of its financial obligations; or (iii) Consultant posts security under ARTICLE, SECURITY.

If requested by Company, Consultant shall within thirty (30) calendar days provide Company with copies of its mostrecent annual and quarterly financial statements prepared in accordance with generally accepted accountingprinciples.

ARTICLE 8. SECURITY

From time to time, Consultant shall provide Company with security against defaults by Consultant underthis Contract in such form and amount as may be reasonably required by Company ("Default Security"), andpursuant to such additional agreements or instruments as may be reasonably required by Company, including, butnot limited to letters of credit, third party guaranty, escrow accounts, labor and material payment bond, surety bonds,and step-in rights. Company may at any time, or pursuant to a request by Consultant, recalculate the amount ofDefault Security required pursuant to this paragraph, in which case Company shall increase or decrease the existingamount of Default Security, as appropriate, to conform the new requirements. At no time shall the amount of DefaultSecurity to which Company is entitled pursuant to this paragraph be less than Company's "Net Replacement Costs",as calculated pursuant to ARTICLE, SECURITY.

If this Contract is terminated as a result of Consultant's default, Consultant shall pay Company the positive difference, ifany, obtained by subtracting the Contract Value from the Replacement Price for any Work that Consultant was otherwiseobligated to provide during the remaining term of this Contract plus compensation for additional managerial andadministrative services and such other costs and damages as Company may suffer as a result of Consultant's breach("Net Replacement Cost"). Amounts owed by Consultant pursuant to this paragraph shall be due within five (5) businessdays after any invoice from Company for the same.

If required by Company, Consultant shall submit to Company a Letter of Credit in an amount to be determined byCompany. The terms of the Letter of Credit shall conform to the attached Exhibit C "Company's Letter of CreditTerms and Conditions" as well as the requirements of this Contract and be issued by a bank satisfactory toCompany. This Letter of Credit shall provide for payment to Company of the Letter of Credit face value ifConsultant defaults under the terms of this Contract.

The Company shall have the right to call the entire amount of the Letter of Credit if Consultant has not renewed theLetter of Credit within thirty (30) calendar days of its expiration.

Consultant's expenses of complying with this Letter of Credit requirement shall be paid by the Consultant.

Other forms of security will be provided in the full amount of the Contract value or Net Replacement Cost valuewhichever is greater.

ARTICLE 9. WITHHOLDING PAYMENT

Company may, without limiting any other rights or remedies Company may have, withhold from paymentssufficient amounts which, in the opinion of Company, reflect the reasonable cost to repair or replace unsatisfactoryWork or the value of any claim against Company which Consultant has failed to settle pursuant to its indemnitycontained herein. Company may also retain from any payment sufficient funds to discharge any delinquent accountsof Consultant for which liens on Company's property have been or can be filed, and Company may at any time paytherefrom for Consultant's account such amounts as are, in the opinion of Company, due thereon, including anysums due under any federal or state law.

ARTICLE 10. DESIGNATED REPRESENTATIVE AND NOTICES

Prior to commencement of the Work, each party shall designate a representative authorized to act in itsbehalf and shall advise the other party in writing of the name, address, and telephone number of such designatedrepresentative, and shall inform the other party of any subsequent change in such designation. All communicationsrelating to the day-to-day activities under this Contract shall be exchanged between such designated representatives.Either party may change the identity or address of its designated representative by giving the other party writtennotice of such change.

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Any notice by either party to the other shall be delivered to the office of the designated representative of the otherparty, or, if deposited in the mail, properly stamped with the required postage and addressed to the office of suchrepresentative.

If to Company:

Attn:

Telephone:

ARTICLE 11. SAFETY AND SITE REGULATIONS

If to Consultant:

Attn:

Telephone:

Consultant shall be solely responsible for being aware of and initiating, maintaining, and supervisingcompliance with all safety laws, regulations, precautions, and programs in connection with the performance of thisContract. Consultant shall also make itself aware of and adhere to the Company Work Site regulations, if any,including, without limitation, environmental protection, loss control, dust control, safety, and security.

ARTICLE 12. EXAMINATION OF WORK AND PROGRESS REPORTS

Consultant shall submit periodic progress reports as requested by Company. Company, its agent orrepresentatives, may visit Consultant's office at any reasonable time to determine status of ongoing Work requiredby this Contract.

All Work will be subject to examination at any reasonable time or times by Company, which shall have the right toreject unsatisfactory Work. Neither examination of Work nor the lack of same nor acceptance of the Work byCompany nor payment therefore shall relieve Consultant from any of its obligations under this Contract.

ARTICLE 13. PROFESSIONAL RESPONSIBILITY

Consultant shall perform the Work using the standards of care, skill, and diligence normally provided by aprofessional in the performance of similar Services, and shall comply with all codes and standards applicable to theWork.

In the event of Consultant's failure to do so, Consultant shall, upon notice by Company, promptly reperform theWork and correct the defect at Consultant's sole cost. Consultant's obligation to correct and reperform its Work shallbe in addition to, and not in lieu of, any other right that Company may have.

ARTICLE 14. CHANGES

Company may at any time in writing require changes and/or additions within the general scope of thisContract or any amendment hereto, direct the omission of or variation in Work, or alter the schedule. If suchdirection results in a material change in the amount or character of the Work, an equitable adjustment in the Contractprice and other such provisions of this Contract as may be affected shall be made and this Contract shall be modifiedin writing accordingly. Any claim by Consultant for an adjustment under this Article shall be processed inaccordance with the provisions of ARTICLE, CLAIM NOTICE AND RESOLUTION PROCEDURE.

No change shall be binding upon Company until a change order is executed by an authorized procurementrepresentative of Company which EXPRESSLY STATES THAT IT CONSTITUTES A CHANGE ORDER TO THIS CONTRACT.THE ISSUANCE OF INFORMATION, ADVICE, APPROVALS, OR INSTRUCTIONS BYANYONE OTHER THAN THE AUTHORIZEDCOMPANY PROCUREMENT REPRESENTATIVE SHALL NOT CONSTITUTE AN AUTHORIZED CHANGE ORDER PURSUANT TOTHIS ARTICLE.

Nothing contained in this paragraph shall excuse Consultant from proceeding with the prosecution of the Work in accordancewith the Contract.

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ARTICLE 15. WORKERS' COMPENSATION

Consultant shall comply with all applicable Workers' Compensation Laws and shall furnish proof thereofsatisfactory to Company prior to commencing Work.

All Workers' Compensation policies shall contain provisions that the insurance companies will have no right ofrecovery or subrogation against the Company, its parent, divisions, affiliates, subsidiary companies, co-lessees, orco-venturers, agents, directors, officers, employees, servants, and insurers, it being the intention of the parties thatthe insurance as effected shall protect all parties.

ARTICLE 16. INSURANCE

Without limiting any liabilities or any other obligations of Consultant, Consultant shall, prior to commencingWork, secure and continuously carry with insurers having an A.M. Best Insurance Reports rating of A-:VII or better thefollowing insurance coverage:

Employers' Liability insurance with a minimum single limit of $1,000,000.

Commercial General Liability insurance. The most recently approved ISO policy, or its equivalent, writtenon an Occurrence Basis, with limits not less than $1,000,000 per occurrence/ $2,000,000 general aggregate(on a per location and/or per job basis) Bodily Injury and Property Damage, including the followingcoverages:

a. Premises and Operations Coverageb. Independent Contractor's Coveragec. Contractual Liabilityd. Products and Completed Operations Coveragee. Coverage for explosion, collapse, and underground property damagef. Broad Form Property Damage Liabilityg. Personal Injury Liability, with the contractual exclusion removedh. Sudden and Accidental Pollution Liability, as appropriate

Business Automobile Liability insurance. The most recently approved ISO policy, or its equivalent, with aminimum single limit of $1,000,000 for bodily injury and property damage including Sudden and AccidentalPollution Liability as appropriate, with respect to Consultant's vehicles whether owned, hired or non-owned,assigned to or used in the performance ofthe Work.

Professional Liability insurance covering damages ansmg out of negligent acts, errors, or omISSIOnscommitted by Consultant in the performance of this Contract, with a liability limit of not less than$1,000,000 each claim. Consultant shall maintain this policy for a minimum of two (2) years aftercompletion of the Work or shall arrange for a two year extended discovery (tail) provision if the policy isnot renewed. The intent of this policy is to provide coverage for claims arising out of the performance ofServices under this Contract and caused by any error, omission, breach or negligent act for which theConsultant is held liable.

Umbrella Liability insurance with a mmrmum limit of $5,000,000 each occurrence/aggregate whereapplicable to be excess of the coverages and limits required in Employers' Liability insurance, CommercialGeneral Liability insurance and Business Automobile Liability insurance above. Consultant shall notifyCompany, if at any time their full umbrella limit is not available during the term of this Contract, and willpurchase additional limits, if requested by Company

Except for Employers' Liability, Business Automobile Liability and Professional Liability insurance, the policiesrequired herein shall include provisions or endorsements naming Company, its officers, directors, agents, andemployees as additional insureds.

To the extent of Consultant's negligent acts or omission, all policies required by this Contract shall includeprovisions that such insurance is primary insurance with respect to the interests of Company and that any otherinsurance maintained by Company is excess and not contributory insurance with the insurance required hereunder,provisions that the policy contain a cross liability or severability of interest clause or endorsement, and provisions

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that such policies not be canceled or their limits of liability reduced without 1) ten (10) calendar days prior writtennotice to Company if canceled for nonpayment of premium, or 2) thirty (30) calendar days prior written notice toCompany if canceled for any other reason. All required insurance policies shall not contain any provisionsprohibiting waivers of subrogation. A certificate in a form satisfactory to Company certifying to the issuance ofsuch insurance shall be furnished to Company. Commercial General Liability coverage written on a "claims-made"basis, if any, shall be specifically identified on the certificate.

Commercial General Liability insurance coverage provided on a "claims-made" basis shall be maintained by Consultantfor a minimum period of five (5) years after the completion of this Contract and for such other length of time necessaryto cover liabilities arising out of the Work.

ARTICLE 17. INDEMNIFICATION

Consultant specifically and expressly agrees to indemnify, defend, and hold harmless Company and itsofficers, directors, employees and agents (hereinafter collectively "Indemnitees") against and from any and allclaims, demands, suits, losses, costs and damages of every kind and description, including attorneys' fees and/orlitigation expenses, brought or made against or incurred by any of the Indemnitees resulting from or arising out ofany negligence or wrongful acts of Consultant, its employees, agents, representatives or Subcontractors of any tier,their employees, agents or representatives in the performance or nonperformance of Consultant's obligations underthis Contract or in any way related to this Contract. The indemnity obligations under this Article shall includewithout limitation:

a. Loss of or damage to any property of Company, Consultant or any third party;

b. Bodily or personal injury to, or death of any person( s), including without limitation employees of Company, orof Consultant or its Subcontractors of any tier; and

c. Claims arising out of Workers' Compensation, Unemployment Compensation, or similar such laws orobligations applicable to employees of Consultant or its Subcontractors of any tier.

The invalidity, in whole or part, of any of the foregoing paragraphs will not affect the remainder of such paragraphor any other paragraph in this Article.

Consultant's indemnity obligation under this Article shall not extend to any liability caused by the sole negligence of anyof the Indemnitees.

ARTICLE 18. CONSEQUENTIAL DAMAGES

IN NO EVENT SHALL COMPANY BE LIABLE FOR CONSEQUENTIAL, SPECIAL, OR INDIRECTDAMAGES, INCLUDING LOST PROFITS OR LOST GOODWILL, WHETHER ARISING FROM CONTRACTOR NEGLIGENCE.

ARTICLE 19. CONSULTANTS PERSONNEL/DRUGS, ALCOHOL AND FIREARMS

Consultant shall employ in the performance of the Work only persons qualified for the same. Consultantshall at all times enforce strict discipline and good order among its employees and the employees of anySubcontractor of any tier. Consultant shall not permit or allow the introduction or use of any firearms, illegal drugsor intoxicating liquor upon the Work under this Contract, or upon any of the grounds occupied, controlled, or usedby Consultant in the performance of the Work. Consultant shall immediately remove from the Work, wheneverrequested by Company, any person considered by Company to be incompetent, insubordinate, careless, disorderly,in violation of the above restriction on firearms, illegal drugs or intoxicating liquor, or under the influence of illegaldrugs or intoxicating liquor, and such person shall not again be employed in the performance of the Work hereinwithout the consent of Company.

ARTICLE 20. LABOR

Consultant shall be aware of, and familiar with, all collective bargaining agreements, which do or maypertain to or affect the Work under this Contract or other work at the Work Site. Consultant shall plan and conductits operations so that its employees and Subcontractors of any tier will work harmoniously with Companyemployees and other workers employed on the same or related projects to assure that there will be no delays, workstoppages, excessive labor costs, or other labor difficulties.

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ARTICLE 21. PROTECTION OF EXISTING FACILITIES

Consultant shall protect existing equipment and facilities, and avoid interference with Company'soperations.

Consultant shall not remove or alter any part of the existing structures, equipment, or facilities without the priorknowledge and consent of Company.

ARTICLE 22. PROGRESS MEETINGS

Company will conduct weekly, or at other regular intervals as agreed by both parties, meetings withConsultant to inspect facilities and discuss any unusual conditions or critical items which have affected or couldaffect the Work.

ARTICLE 23. LAWS AND REGULATIONS

Consultant shall at all times comply with all applicable laws, statutes, regulations, rules, ordinances, codes,and standards, including without limitation, those governing wages, hours, desegregation, employmentdiscrimination, employment of minors, health, and safety. Consultant shall comply with equal opportunity laws andregulations to the extent that they are applicable.

Consultant shall indemnify, defend, and hold harmless Company, its officers, directors, employees, and agents fromall losses, costs and damages by reason of any violation thereof and from any liability, including without limitation,fines, penalties, and other costs arising out of Consultant's failure to so comply.

ARTICLE 24. INDEPENDENT CONTRACTOR

Consultant is an independent contractor and all persons employed by Consultant in connection herewithshall be employees of Consultant and not employees of Company in any respect.

ARTICLE 25. COOPERATION WITH OTHERS

Consultant shall fully cooperate and coordinate with Company employees and other contractors who maybe awarded other work. Consultant shall not commit or permit any act which will interfere with the performance ofWork by Company employees or other contractors. To the extent Consultant has a claim as a result of theinterference or lack of cooperation by another contractor, Consultant's sole remedy shall be against the othercontractor.

ARTICLE 26. LIENS

Consultant shall 1) indemnify, defend, and hold harmless Company from all laborers', materialmen's, andmechanics' liens, or claims made or filed upon the Work, or the property on which the Work is located on account ofany Work or Service performed or furnished by Consultant's Subcontractors of any tier and all laborers,materialmen, mechanics, and other persons in connection with the Work, and 2) keep the Work and said propertyfree and clear of all liens or claims arising from the performance of any Work covered by this Contract byConsultant, its Subcontractors of any tier, and all laborers, materialmen, mechanics, and other such persons.

If any lien arising out of this Contract is filed before or after Work is completed, Consultant, within ten (10) calendardays after receiving from Company written notice of such lien, shall obtain release of or otherwise satisfy such lien. IfConsultant fails to do so, Company may take such steps and make such expenditures as in its discretion it deemsadvisable to obtain release of or otherwise satisfy any such lien or liens, and Consultant shall upon demand reimburseCompany for all costs incurred and expenditures made by Company in obtaining such release or satisfaction.

Consultant's obligation to indemnify, defend, and hold harmless Company from liens shall not in any way be renderedunenforceable, or altered, amended, eliminated or otherwise conditioned by any laws and regulations related toprocessing such liens. Company shall have no obligation to deliver a copy of any notice of claim or right to a lien toConsultant or any other person or entity.

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ARTICLE 27. CONFLICTS, ERRORS, OMISSIONS, OR DISCREPANCIES IN CONTRACT DOCUMENTS

Consultant shall advise Company in writing of all conflicts, errors, omissions, or discrepancies among thevarious documents comprising this Contract immediately upon discovery and prior to Consultant's performing theaffected Work. Company shall resolve such conflicts and such resolution shall be final. Anything mentioned in thespecifications and not shown on the drawings, or shown on the drawings and not mentioned in the specifications,shall be considered as if shown or mentioned in both.

ARTICLE 28. CLAIM NOTICE AND RESOLUTION PROCEDURE

In the event Consultant has a claim or request for a time extension, additional compensation, any otheradjustment of the Contract terms, or any dispute arising out of the Work (hereinafter "Claim"), Consultant shallnotify Company in writing within five (5) business days following the occurrence of the event giving rise to theClaim. Consultant's failure to give notice as required will constitute a waiver of all of Consultant's rights withrespect to the Claim.

As soon as practicable after Claim notification, Consultant shall submit the Claim to Company with all supportinginformation and documentation. Consultant shall also respond promptly to all Company inquiries about the Claimand its basis.

Any Claim, which is not disposed of by mutual agreement between the parties, shall be decided by Company, whichshall provide a written decision to Consultant. Such decision shall be final unless Consultant, within thirty (30)calendar days after such receipt of Company's decision, provides to Company a written protest, stating clearly and indetail the basis thereof. It is agreed that Consultant's failure to protest Company's decision shall constitute a waiverby Consultant of its Claim. Even if a Claim arises, Consultant shall continue its performance of this Contract.

ARTICLE 29. SUSPENSION OF WORK

Company may, by written notice, direct Consultant to suspend performance of any or all of the Work for aspecified period of time. Upon receipt of such notice to suspend, Consultant shall 1) discontinue Work, 2) place nofurther orders or subcontracts, 3) suspend all orders and subcontracts, 4) protect and maintain the Work, and 5)otherwise mitigate Company's costs and liabilities for those areas of Work suspended.

ARTICLE 30. TERMINATION FOR CONVENIENCE

Company may terminate this Contract at any time without cause prior to its completion by sending toConsultant written notice of such termination. Upon such termination, Company will pay to Consultant an equitableamount for all Work satisfactorily performed by Consultant as of the date of termination. Company shall not beliable for anticipated profits based upon Work not yet performed.

ARTICLE 31. TERMINATION FOR CAUSE

1. For purposes of this Contract, a material default by Consultant shall be the occurrence of any ofthe following:

a. A breach by Consultant of any of its material obligations under this Contract, if such breach continuesuncured for a period of ten (10) calendar days after receipt of written notice from Company, unless suchbreach cannot by its nature be remedied within such period in which event Consultant shall provide evidencereasonably satisfactory to Company within ten (10) calendar days after receipt of such notice that suchbreach will be corrected or that Consultant is making reasonable progress to that end. For purposes of theContract, a material default by Consultant shall be deemed to include, without limitation, Consultant'srefusal or neglect to supply sufficient and properly skilled workmen, materials of the proper quality orquantity, or equipment necessary to perform the Work described in this Contract properly, or Consultant'sfailure in any respect to prosecute the Work described in this Contract or any part thereof with promptness,diligence, and in accordance with all of the material provisions hereof;

b. A determination that any representation, statement. or warranty made by Consultant in this Contract, theConsultant's proposal, or any other statement, report, or document which Consultant is required to furnish toCompany was false or misleading in any material respect;

c. The filing by or against Consultant of a proceeding under any bankruptcy or similar law, unless suchproceeding is dismissed within thirty (30) calendar days from the date of filing; the making by Consultant of

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any assignment for the benefit of creditors; the filing by or against Consultant for a proceeding fordissolution or liquidation, unless such proceeding is dismissed within thirty (30) calendar days from the dateof filing; the appointment of or the application for the appointment of a receiver, trustee, or custodian forany material part of Consultant's assets unless such appointment is revoked or dismissed within thirty (30)calendar days from the date thereof; the attempt by Consultant to make any adjustment, settlement, orextension of its debts with its creditors generally; the insolvency of Consultant; the filling or recording of anotice of lien or the issuance or the obtaining of a levy of execution upon or against a material portion ofConsultant's assets, unless such lien or levy of execution is dissolved within thirty (30) calendar days fromthe date thereof.

d. A Material Adverse Change has occurred with respect to Consultant and Consultant fails to provide suchperformance assurances as are reasonable requested by Company, including, without limitation, the postingof additional "Security" pursuant to ARTICLE, SECURITY.

2. Upon the occurrence of a breach or material default specified in this ARTICLE, TERMINATION FOR CAUSEhereof, Company shall have the right to terminate this Contract for cause.

3. Upon the occurrence of any such material default, following the applicable process described in this ARTICLE,TERMINATION FOR CAUSE, Company shall be entitled upon written notice to Consultant and without noticeto Consultant's sureties and without limiting any of Company's other rights or remedies, to terminate thisContract or to terminate Consultant's right to proceed with that portion of the Work affected by any suchmaterial default.

4. Upon termination of this Contract or any portion of this Contract upon a material default by Consultant,Company shall be entitled to pursue any and all rights and remedies that it may have against Consultant underthis Contract or at law or in equity.

5. Upon receipt of any such written notice of termination of the entire Contract or of any right to proceed with anyportion of the Work following the applicable process described in this ARTICLE, TERMINATION FORCAUSE, Consultant shall, at its expense, for that portion of the Work affected by any such termination;

a. Assess the status ofany Service still due and preserve any Work performed; and

b. To the extent that they are assignable, assign to Company any and all subcontracts and equipment rentalagreements as designated in writing by Company.

In the event of such termination, Company may, for the purpose of completing the Work or enforcing theseprovisions, take possession of all equipment, tools, appliances, documentation, software source media, flow charts,documents and deliverables at the Company's Work Site belonging to or under the control of Consultant, and mayuse them or may finish the Work by whatever method it may deem expedient including the hiring of anothercontractor or contractors under such form of agreement as Company may deem advisable while still maintainingtheir obligation to mitigate damages, or Company may itself provide any labor or materials and perform any part ofthe Work. Notwithstanding anything to the contrary contained herein, Company may not take possession of or usetrade secrets proprietary to any of Consultant's suppliers or Subcontractors unless Consultant has the right pursuantto its agreement with such suppliers or Subcontractors to grant such rights to Company. Consultant shall cooperatewith and assist Company in attempting to acquire from Consultant's suppliers and Subcontractors the right to takepossession of and use any and all such trade secret materials in the event of such termination. All trade secretsproprietary to Consultant shall remain subject to the provisions herein, and Company shall not have any broaderrights to use or disclose such trade secrets as a result of such termination. Any software embodying any ofConsultant's trade secrets shall also be subject to the provisions herein. In the event of such a termination,Consultant shall not be entitled to receive any further payment until the Work is completed. If the unpaid balance ofConsultant's compensation hereunder shall exceed the sum of the expense of finishing the Work plus compensationfor additional managerial and administrative services and such other costs and damages as Company may suffer as aresult of Consultant's breach, such excess shall be paid to Consultant. If such expense, compensation, costs, anddamages exceed such unpaid balance, Consultant and its sureties, if any, shall be liable for and shall pay, the excesscost to cover Company to a maximum of forty (40) percent of the total Contract value. Failure of Company toexercise any of its rights hereunder shall not excuse Consultant from compliance with the provisions of the Contractnor prejudice rights of Company to recover damages for such material default.

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ARTICLE 32. DELAYS

Force Majeure. Neither party shall be liable for delays due to strikes or other labor disturbances which are not (a)restricted to the Work Site, or other location where the obligations under this Contract are being performed and (b)attributable to the actions of the party claiming the Force Majeure, fire, riots, acts of God, acts of the public enemy,or other similar unforeseeable cause beyond the control and without the fault or negligence of the party incurringsuch delay; however, both parties agree to seek to mitigate the potential impact of any such delay. Any ForceMajeure delay shall not be the basis for a request for additional compensation. In the event of any such delay, therequired completion date may be extended for a reasonable period not exceeding the time actually lost by reason ofthe delay.

Company-Caused Delay. Should Company cause a delay in Consultant's performance and if Company determinesthe facts justify an extension of time and/or additional compensation and no remaining float time exists in theschedule, this Contract will be so modified. Company may, at its discretion, in lieu of granting an extension of time,require Consultant to regain the schedule whereby Company shall compensate Consultant for all additional costsreasonably incurred thereby. No adjustment under this Article shall be made for any delay to the extent that it iscaused or contributed to by Consultant or performance would have been delayed by any other cause, including thefault or negligence of Consultant.

Request For Time Extension. Any request for time extension or additional compensation shall be made inaccordance with ARTICLE, CLAIM NOTICE AND RESOLUTION PROCEDURE.

ARTICLE 33. EQUAL EMPLOYMENT OPPORTUNITY AND OTHER NONDISCRIMINATION CLAUSES

Consultant shall at all times comply with all applicable laws, statutes, regulations, rules, ordinances, codes,and standards including, without limitation, those governing wages, hours, desegregation, employmentdiscrimination, employment of minors, health, and safety. Consultant shall comply with equal opportunity laws andregulations to the extent that they are applicable.

Consultant shall indemnify, defend and hold harmless Company, its directors, officers, employees, and agents from alllosses, costs, and damages by reason of any violation thereof and from any liability, including, without limitation, fines,penalties, and other costs arising out of Consultant's failure to so comply.

ARTICLE 34. RELEASE OF INFORMATION - ADVERTISING AND PROMOTION

Consultant shall not publish, release, disclose, or announce to any member of the public, press, officialbody, or any other third party any information concerning this Contract and/or the Work, or any part thereof, withoutthe express prior written consent of Company, except as required by law. Neither the names of Company, nor theWork Site shall be used in any advertising or other promotional context by Consultant without the express priorwritten consent of Company.

ARTICLE 35. CONFIDENTIAL INFORMATION NONDISCLOSURE

Definition of Confidential Information. As used in this Contract, the term "Confidential Information" means 1)proprietary information of Company, 2) information marked or designated by Company as confidential, 3)information, whether or not in written form and whether or not designated as confidential, which is known toConsultant as being treated by Company as confidential, 4) information provided to Company by third parties whichCompany is obligated to keep confidential, and 5) information developed by Consultant in connection with theperformance of this Contract.

Nondisclosure. Consultant agrees that it will not disclose Confidential Information, directly or indirectly, under anycircumstances or by any means, to any third person without the express written consent of Company.

Nonuse. Consultant further agrees that it will not use Confidential Information except as may be necessary toperform the Work called for by this Contract.

Protection. Confidential Information will be made available by Consultant to its employees only on a "need toknow" basis and only after notifying such employees of the confidential nature of the information and after havingobligated them to the nonuse and nondisclosure obligations of this Contract. Consultant agrees to take all reasonableprecautions to protect the confidentiality of Confidential Information and, upon request by Company, to return toCompany any documents which contain or reflect such Confidential Information.

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Unless waived by Company, Consultant shall require its employees and Subcontractors of any tier to adhere to theseconfidential information and nondisclosure terms.

ARTICLE 36. OWNERSHIP OF DESIGNS, DRAWINGS AND WORK PRODUCT

All materials prepared or developed hereunder by Consultant or its employees, or Subcontractors or theiremployees or agents, including documents, calculations, maps, sketches, designs, tracings, notes, reports, data,computer programs, models, and samples shall become the property of Company when prepared, whether deliveredto Company or not, and shall, together with any materials furnished Consultant and its employees by Companyhereunder, be delivered to Company upon request, and, in any event, upon termination or final acceptance of theWork.

Consultant agrees that all work prepared by it, or its employees, agents, or Subcontractors of any tier, or theiremployees, under this Contract which is subject to protection under copyright laws constitutes "work made for hire,"all copyrights to which belong to Company. In any event, Consultant assigns to Company all intellectual propertyrights in such work whether by way of copyright, trade secret, or otherwise, and whether or not subject to protectionby copyright laws.

Consultant may, upon request to Company and subject to Company's consent, retain copies of such material forfurtherance of its professional knowledge.

Should Consultant or its employees, officers, agents, Subcontractors of any tier, or anyone of a like nature originateor develop any trade secret, discovery, improvement, idea, formula, process, or invention (collectively "Invention"),in performance of the Work, such Invention, whether or not patentable and whether or not reduced to practice, shallbe disclosed to and shall be the property of Company, and Consultant hereby assigns to Company all of its right,title, and interest in such Invention, and agrees to execute all documents which Company reasonably determines tobe necessary or convenient for use in applying for, perfecting or enforcing patents or other intellectual propertyrights, including, without limitation, the execution of any assignments, patent applications, or other documentswhich may reasonably be requested by Company.

ARTICLE 37. FATENT AND COPYRIGHT INDEMNITY

Consultant shall indemnify, defend, and hold harmless Company, its directors, officers, employees, and agentsagainst and from all claims, losses, costs, suits, judgments, damages, and expenses, including attorneys' fees, of anykind or nature whatsoever on account of infringement of any patent, copyrighted or uncopyrighted work, includingclaims thereof pertaining to or arising from Consultant's performance under this Contract. If notified promptly inwriting and given authority, information, and assistance, and contingent upon Company not taking any positionadverse to Consultant in connection with such claim, Consultant shall defend, or may settle at its expense, any suitor proceeding against Company so far as based on a claimed infringement which would result in a breach of thiswarranty and Consultant shall pay all damages and costs awarded therein against Company due to such breach.

In case any product, Service, or combination thereof is in such suit held to constitute such an infringement and theuse of said product or Service is enjoined, Consultant shall, at its expense and through mutual agreement betweenthe Company and the Consultant, either procure for Company the right to continue using said product or Service, orreplace same with a non-infringing product or Service, or modify same so it becomes non-infringing, or remove theproduct or halt the Service and refund the purchase price and any transportation costs separately paid by Company.If removal renders Work unusable for the purposes hereunder, Consultant shall refund all monies paid for the Work.The foregoing states the entire liability of Consultant for patent infringement relating to products, services, or anycombination thereof.

ARTICLE 38. NONEXCLUSIVE RIGHTS

Nothing in this Contract is to be construed as granting to Consultant an exclusive right to provide any or allof the work anticipated herein. The use of Consultant's services is completely discretionary with Company. ThisContract shall not be construed in any way to impose a duty upon Company to use Consultant.

ARTICLE 39. ASSIGNMENT

Consultant shall not assign this Contract, or any part hereof, or any rights or responsibilities hereunderwithout the prior written consent of Company, and any attempted assignment in violation hereof shall be void.

Page 33 of36

No provision of this Contract shall be construed as limiting Company's right to permit Its parent, divisions,affiliates, or subsidiary companies to use or benefit from the Services provided for in this Contract. The Company'sparent, divisions, affiliates, or subsidiary companies agree to be bound by the terms and conditions, and applicableappendices or exhibits set forth herein to the extent they utilize this Contract.

ARTICLE 40. SUBCONTRACTS

Consultant shall neither subcontract nor permit any portion of the Work to be subcontracted without theprior written consent of Company; and Consultant shall be fully responsible for the acts or omissions of anySubcontractors of any tier and of all persons employed by them, shall maintain complete control over all suchSubcontractors, and neither the consent by Company, nor anything contained herein, shall be deemed to create anycontractual relation between the Subcontractors of any tier and Company.

ARTICLE 41. NONWAIVER

The failure of Company to insist upon or enforce strict performance by Consultant of any of the terms ofthis Contract or to exercise any rights herein shall not be construed as a waiver or relinquishment to any extent ofCompany's right to assert or rely upon such terms or rights on any future occasion.

ARTICLE 42. SEVERABILITY

Any provisions of this Contract prohibited or rendered unenforceable by law shall be ineffective only to theextent of such prohibition or unenforceability without invalidating the remaining provisions of this Contract.

ARTICLE 43. APPLICABLE LAW AND VENUE

This Contract shall be governed by and construed in accordance with the laws of the State of Oregon. Anylitigation between the parties arising out of or relating to this Contract will be conducted exclusively in federal orstate courts in the State of Oregon and Consultant consents to jurisdiction by such courts.

ARTICLE 44. ENTIRE AGREEMENTIDOCUMENTS INCORPORATED BY REFERENCE

This Contract and any referenced attachments constitute the complete agreement between the parties. Allunderstandings, representations, warranties, agreements and any referenced attachments, if any, existing between theparties regarding the subject of matter hereof are merged into and superseded by this Contract, which fully andcompletely expresses the agreement of the parties with respect to the subject matter hereof. Any scope of work,specifications, drawings, schedules or other documents listed in this Contract are incorporated by reference into thisContract.

Company assumes no responsibility for any understanding or representation made by any of its employees, officers,or agents during or prior to the negotiations and execution of this Contract, unless such understanding orrepresentation is expressly stated in the Contract.

The parties intend that the terms and conditions of this Contract, its referenced attachments, and any purchase orderor work releases that may be issued relating to this Contract should be complementary with each other; however, inthe event of a conflict between the terms and conditions of any purchase order or work releases and those of theContract, the terms and conditions of the Contract shall take precedence and control over any other correspondence,purchase order or work releases.

Page 34 of36

ARTICLE 45. EXECUTION AND EFFECTIVE DATE

This Contract has been executed by duly authorized representatives of the parties and shall be effective asof date of execution by the Company.

CONSULTANT: COMPANY:

PacifiCorp

By: By:

(Signature) (Signature)

Name: Name:(Type or Print) (Type or Print)

Title: Title:

(Date Executed) (Date Executed)

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Attachment COregon Public Utility Commission

Competitive Bidding GuidelinesOrder No. 06-446

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ORDER NO. 06-446

ENTERED 08/10/06BEFORE THE PUBLIC UTILITY COMMISSION

OF OREGON

UM 1182

In the Matter of an Investigation Regarding )Competitive Bidding. )

DISPOSITION: GUIDELINES ADOPTED

ORDER

On December 3,2004, the Northwest Independent Power Producers'Coalition (NIPPC) filed a petition asking the Public Utility Commission of Oregon(Commission) to open an investigation regarding competitive bidding requirements for newsupply-side resource acquisitions applicable to Oregon's investor-owned electric utilities.

The Commission subsequently opened an investigation. Numerousconferences and workshops were held, as well as a public workshop with the Commissioners.The process culminated with written opening and reply comments, which were filed inSeptember and October 2005.

Intervening parties are Citizens' Utility Board of Oregon (CUB), NorthwestEnergy Coalition (NWEC), Renewable Northwest Project (RNP), Portland MetropolitanAssociation of Building Owners and Managers (BOMA), Idaho Power Company (IdahoPower), NIPPC, Portland General Electric Company (PGE), PacifiCorp, IndustrialCustomers of Northwest Utilities (lCND), Oregon Department of Energy (ODOE), CascadeNatural Gas Corporation (Cascade), Northwest Natural Gas Company (NWN), AvistaCorporation (Avista) and Commission staff (Staff).

Opening comments were filed by NlPPC, Idaho Power, PacifiCorp, ICNU,POE and Staff. CUB, RNP and NWEC filed joint opening comments. Reply commentswere filed by ODOE, NIPPC, Idaho Power, PacifiCorp, POE and Staff. RNP and NWECfiled joint reply comments.

Competitive Bidding Goals

In Order No 91-1383, the Commission adopted policies and guidelinesregarding competitive bidding for investor-owned electric companies in Oregon.

ORDER NO. 06-446

Those goals have guided us well over the years. Therefore, we are making only slightmodifications to those 1991 goals. The revised goals are:

1. Provide the opportunity to minimize long-term energy costs, subject toeconomic, legal and institutional constraints;

2. Complement Oregon's integrated resource planning process;

3. Not unduly constrain utility management's prerogative to acquire newresources;

4. Be flexible, allowing the contracting parties to negotiate mutuallybeneficial exchange agreements; and

5. Be understandable and fair.

Finally, we agree with Staff that the Request For Proposal (RFP) process is a"means to promote and improve the resource actions identified in the utility's IRP [IntegratedResource Plan] Action Plan." See, Staff Reply Comments at 7. Changes occur from the timean Action Plan is acknowledged to when an RFP is released. The changes may be simple,due merely to the passage of time, or dramatic, such as the Western power crisis in 2000.While a utility's Action Plan establishes a roadmap, it is not in the customer's best interestfor any utility to march lockstep without any deviation from the plan. We have found thatflexibility is important in meeting the goals set out above.

Competitive Bidding Guidelines

After receiving considerable input from the parties, Staff prepared astraw proposal that updated the current competitive bidding process. This proposal wasdistributed to the parties, who then filed comments regarding the proposal. Staff made somesuggested changes to its initial straw proposal in light of parties' comments. These changesare incorporated in Staff s reply comments.

We have considered all of the parties' comments and made our own changesto the straw proposal filed by Staff. In adopting our own, we have reorganized andrenumbered the guidelines as originally presented by Staff in its straw proposal. In thefollowing discussion, we will explain the rationale for our guidelines, and address some of

. the comments filed by the participants. We do not, however, summarize and address all ofthe comments. The revised competitive bidding guidelines, attached as Appendix A andincorporated herein, take into account the experience we have gained since we adopted theinitial guidelines in 1991. While we are adopting a set of guidelines, we have drafted themwith both mandatory and permissive language so that the involved utilities will clearlyunderstand our preferences.

We address each as it appears in Appendix A, followed by comment about thespecific guideline.

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Adopted Bidding Guidelines

1. RFP Requirement: A utility must issue an RFP for all Major Resourceacquisitions identified in its last acknowledged Integrated Resource Plan (IRP). MajorResources are resources with durations greater than 5 years and quantities greater than 100MW:

Comment

The definition of Major Resources includes two thresholds: the duration ofthe resource must be greater than five years, and the resource output must be greater than 100MW. The parties did not agree on either threshold.

In its straw proposal, Staff recommended a threshold of five years. In general,all parties agree with this threshold except for the utilities. The utilities believe that a tenyear duration is a more appropriate threshold for triggering an RFP, so that they would havethe necessary flexibility to pursue mid-term resources. Further, the utilities express concernwith regulatory time commitments needed for approval, as well as the time commitment bythe utility in completing the RFP process.

As to output, Staff initially recommended a quantity threshold of 50 MW but,in response to the parties' comments, does not oppose a higher threshold. The utilities seek ahigher threshold of 100 MW. In addition, PGE argues that the resource output should bedefined as MWa rather than MW. PGE contends that MWa ensures that non-dispatchable,intermittent or energy limited resources, such as wind and hydro power, are treated on acomparable basis with other technology types with higher expected capacity factors. RNPand NWEC thought the resource quantity could be increased to 100 MW to accommodatesome of the utilities' concerns. RNP, however, opposed PGE's proposed use of MWa,noting such use would allow a utility to acquire wind projects as large as 300 MW withoutbidding. leND and NIPPC support Staff s initial 50 MW threshold, but provide littlejustification for the lower standard.

We hold that the duration threshold should be five years and the resourceoutput threshold should be 100 MW. While we understand the issues of regulatory timecommitments, and the limited exposure to customers of utilities acquiring mid-term resourcesof five to ten years in duration, we believe that resources greater than five years, with aresource output of more than 100 MW, should undergo a bidding process to ensure obtainingleast-cost resources for customers. We will review the practical effects of the durationthreshold over the next several years and revise it, if necessary.

Idaho Power raises two concerns not related to the duration or size of thesethresholds. First, Idaho Power explains that, unlike other Oregon utilities, its practice is toconduct RFPs on a resource-by-resource basis. Idaho Power hopes to continue this approach,enabling it to preserve the benefits associated with the diversity reflected in the IRP'spreferred portfolio. Second, Idaho Power believes that the acquisition of certain largecapital-intensive resources, such as a large jointly-owned thermal plant, might not lend itself

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ORDER NO. 06-446

to a traditional RFP process because of project complexity, site-specific design and multipleparties which may be involved.

The guideline does not require a utility to conduct an all-resource bid.Accordingly, Idaho Power, or any other utility, may seek competitive bids on a resource-byresource basis. Furthermore, as to questions on whether an RFP process may not be suitablefor the acquisition of certain resources, a utility may seek a waiver of the biddingrequirement under the next guideline discussed below.

2. Exceptions to RFP Requirement: A utility is not required to issue an RFP underthe following circumstances:

a. Acquisition ofa Major Resource in an emergency or where there is a time-limited resource opportunity ofunique value to customers.

b.Resource.

c.

Acknowledged IRP provides for an alternative acquisition methodfor a Major

Commission waiver on a case-by-case basis.

Within 30 days ofa Major Resource acquisition under Subsection (a) above, the utility mustfile a report with the Commission explaining how the requisite conditions have been met foracting outside of the RFP requirement. The report must be served on all the parties andinterested persons in the utility's most recent rate case, RFP and IRP dockets.

When requesting a waiver under Subsection (c) above, the utility must file its request with theCommission and serve the request on all parties and interested persons in the utility'S mostrecent general rate case, RFP and IRP dockets. The Commission will issue an orderaddressing the waiver request within 120 days, taking such oral and written comments as itfinds appropriate under the circumstances.

Comment

Staffs straw proposal included an exception to the RFP process inemergencies or when action is needed to take advantage of a time-limited resourceopportunity. PacifiCorp contends this waiver should also include similar situations involving"self-build" resources. Staff supports PacifiCorp's proposal. NIPPC does not opposePacifiCorp's waiver proposal, but questions how a utility self-build resource could ever beutilized in response to an emergency or to take advantage of a time-limited opportunity.

We are cognizant that emergencies arise or specific, time-limited resourceopportunities become available, requiring utility action without an RFP process. When thoseevents occur, however, we want to be notified, in some detail, as to why the utility did notuse an RFP process for acquiring the Major Resource.

Further, there may be situations, such as that previously discussed underGuideline 1, where a utility decides to ask for a waiver of the RFP process. We are

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ORDER NO. 06-446

committed to resolving such requests quickly, using less than a full contested case process.We find this to be appropriate, as we are not making any ratemaking decisions when wewaive an RFP requirement. We do not anticipate, however, that utilities will be asking formany such waivers, as we see competitive bidding to be the appropriate method for obtainingMajor Resources.

3. Affiliate Bidding: A utility may allow its affiliates to submit RFP bids.If affiliates are allowed to bid, the utility must blind all RFP bids and treat affiliate bids thesame as all other bids.

4. Utility Ownership Options: A utility may use a self-build option in anRFP to provide a potential cost-based alternative for customers. A site-specific, self-buildoption proposed in this way is known as a Benchmark Resource. A utility may also considerownership transfers within an RFP solicitation.

Comment

These guidelines are taken from part of Guideline 9 in Staffs straw proposal.Staff s terminology used in its initial straw proposal generated comment. Idaho Power notesthat, because it routinely employs an independent consultant in its RFP process, the companydoes not distinguish between "Standard" and "Non-Standard" RFPs. PacifiCorp and PGEpropose more descriptive terms be used to differentiate between RFPs with and without autility self-build option. PacifiCorp also cautions that the term "Benchmark Resource"should be limited to a utility's self-build options. PacifiCorp explains that other options maybe evaluated against a "benchmark," which could be the market or other market options.

We have addressed the parties' concerns about terminology by dispensingwith labels. Indeed, as further discussed below, such distinctions generally are not neededbecause all RFPs now require the use of an independent evaluator. To address PacifiCorp'sspecific concern, we define a Benchmark Resource as a site-specific, self-build option forwhich there IS a commitment to proceed if it is the resource selected through the RFP. Thisdefinition does not preclude a utility from designating the market as an alternativecomparator during the RFP evaluation process. If no resources are acquired through the RFPbecause bids are inferior to the evaluation benchmark, we do not expect an emergency selfbuild shortly thereafter.

Other comments focused on whether independent power producers should begiven an opportunity to build on the utility's site as part of an RFP that includes a self-buildoption. NIPPC, K'Nl.I, and CUB are in favor of such an opportunity; POE and PacifiCorpoppose it. POE explains that, if bidders have access to the utility's site, then the utilityshould be given access to bidders' sites. Staff raises some legal problems with requiringutilities to provide independent bidders access to utility sites.

We will not require a utility to offer its site locations for development byindependent power producers. Granted, a utility could allow a resource to be built upon aparticular named piece of utility property. However, that is a decision to be made by the

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utility. We share Staffs concerns, raised after consultation with the Department of Justice,whether this Commission has the legal authority to implement the NIPPC and ICNUrecommendation. Rather, we adopt Staffs suggestion that the utility be encouraged to offerits site for third party development, as PacifiCorp proposed in its RFP for resources in 2012,docket UM 1208.

Finally, CUB and ODOE argue that independent bidders should be given theright to use a utility's transmission facilities. Again, PGE opposes such access, and contendsthat any use of PGE transmission facilities would have to comply with requirementsmandated by the Federal Energy Regulatory Commission (PERC).

We will not impose third party access to a utility's transmission facilitiesbeyond the access allowed under FERC rules. We encourage utilities, however, to provideinformation on the availability of transmission facilities and planed projects to bidders.

5. Independent Evaluator (IE): An IE must be used in each RFP to helpensure that all offers are treated fairly. Commission Staff, with input from the utility andinterested, non-bidding parties, will recommend an IE to the Commission, which will thenselect or approve an IE for the RFP. The IE must be independent of the utility and likely,potential bidders, and also be experienced and competent to perform all IE functionsidentified in these Guidelines. The IE will contract with and be paid by the utility. The IEshould confer with Commission staffas needed, on the IE's duties under these Guidelines.The utility may request recovery of its payments to the IE in customer rates.

Comment

The parties addressed various issues related to the use, qualifications,selection, reporting, and costs of an IE. As to use, the parties generally focus on need for anIE when an affiliate or self-build option is involved. NIPPC explains that, in such situations,an IE is integral to assuring a comparable evaluation of resources.

We conclude that an IE should be used for all RFPs. While an IE's role is notas involved for an RFP without ownership options or Affiliate Bidding, we find that using anIE has value. We want an independent overseer of the process. As for qualifications, allparties agree on the need for impartiality, but the utilities claim Staffs straw proposalexcluding all candidates providing, or those that have recently provided, consulting servicesto participants in the western energy markets-is too limiting. Such a restriction, accordingto PacifiCorp, would preclude the ability to obtain an IE with sufficient experience.PacifiCorp contends that guidelines should balance the need for both independence andexperience, without sacrificing one or the other. Staff is persuaded by this argument andsupports PacifrCorp's recommendation.

We adopt PacifiCorp's proposal that the guidelines should seek a qualified IEin terms of both independence and experience. We also adopt PacifrCorp's recommendationthat any IE candidate disclose any actual or potential conflicts to help the Commission assessindependence.

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ORDER NO. 06-446

Parties have different views on the process used to select an IE. Stafforiginally proposed that the IEs be selected by the utility and Staff from a list of qualifiedcandidates. ICNU believes that only Staff, with input from non-bidding parties, should selectthe IE. ODOE proposes that the utility should be allowed to participate in the IE selection,but not have the final authority to select. Most parties agree that, once selected, the IE shouldreport to Staff, not the utility.

We believe the utility and non-bidders should participate in the process andprovide input to Staff. Staff, however, should make a final recommendation to theCommission for approval, which could be accomplished at a public meeting. In approving afinal selection, we will give due consideration to an IE already selected for the RFP byanother state commission.

We further conclude that the contract for the IE's services should be enteredinto by the utility and IE. The utility should pay the IE and otherwise manage and administerthe contract. The Commission should not be a party to the contract. We recognize that sucha contractual arrangement fails to provide the Commission or Staff the legal right to controlor direct the IE's activities in response to any reporting requirement and may be problematic.Nonetheless, we are confident that, in the interest of obtaining RFP acknowledgement, theutility will encourage the IE to consult and confer with Staff to help address any actionsneeded on the part of the IE.

Finally, with regard to IE costs, Staff originally proposed that the IE be paidby the utility through assessments on all bidders, including the utility. In comments,however, most parties, including Staff, favor the payment by the utility with possiblerecovery from customers. ODOE explains that adding IE costs to the already high cost ofpreparing a bid might discourage bidder participation, particularly for small projects, as isoften the case with renewable resource and cogeneration projects.

We agree that if an IE is useful to the process, and we believe that to be so,then the cost of the IE should be included in rates. Utilities may request deferred accountingto track the costs of IEs for later prudency review and potential inclusion in rates.

6. RFP Design: The utility will prepare a draft RFP and provide it to allparties and interested persons in the utility's most recent general rate case, RFP and IRPdockets. The utility must conduct bidder and stakeholder workshops on the draft RFP. Theutility will then submit a final draft RFP to the Commissionfor approval, as described inGuideline 7 below. The draft RFPs must set forth any minimum bidder requirements forcredit and capability, along with bid evaluation and scoring criteria. The utility may set aminimum resource size, but Qualifying Facilities larger than 10 MW must be allowed toparticipate. The final draft submitted to the Commission must also include standardformcontracts. However, the utility must allow bidders to negotiate mutually agreeable finalcontract terms that are different from ones in the standard form contracts. The utility willconsult with the IE in preparing the RFPs, and the IE will submit its assessment ofthe finaldraft RFP to the Commission when the utility files for RFP approval.

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ORDER NO. 06-446

Comment

This guideline combines features originally set forth in Guidelines 9 and 10 ofStaff's straw proposal. In Guideline 9, Staff referred to the joint responsibility of the utilityand IE to draft certain RFP requirements and develop minimum bidder criteria. Staff alsoproposed the utility allow opportunities for public involvement in the RFP and, to facilitatesuch input, provide 60-day advanced notice of its intention to conduct an RFP and possiblyconduct workshops. In Guideline 10, Staff recommended that the utility may proposeminimum bidder requirements for credit and capability, and that such requirements wouldalso be subject to public comment during the RFP design.

In comments, RNP supports the proposed public input opportunities. IdahoPower, however, raises concerns about the release of bid evaluation and scoring criteriaduring public workshops. Idaho Power considers the criteria to be proprietary informationthat should be afforded protection. PacifiCorp also raises concerns about Staff s use of theword "may" in recommending that a utility may propose minimum bidder requirements.PacifiCorp is concerned that such language might suggest that minimum bidder requirementsare not necessary. On this issue, Idaho Power provides a list of minimum bidder attributesthe company customarily establishes, with the assistance of an independent consultant.PacifiCorp and Staff agree that the IE and other parties should be allowed to review theproposed minimum bidder requirements, which should be approved by the Commission.Lastly, ODOE contends that all resources over 10 MW should be allowed to bid, in order tobe consistent with the Commission's limit for standard avoided cost rates and standardcontracts for Qualifying Facilities, and that bids should not be excluded because of the lackof transmission capabilities.

In adopting the guideline above, we revise the language to clarify that theutility is responsible for preparing the draft RFP, conducting bidder and stakeholderworkshops, and submitting the final RFP to the Commission for approval. The utility must,however, consult with the IE during these activities, and the IE will submit an assessment ofthe final RFP to the Commission during the approval phase discussed below.

We also modify the language used in the straw proposal to require the utilityto conduct bidder and stakeholder workshops. We required PacifiCorp to utilize this openprocess in its 2004 RFP, and believe it should be mandatory to allow all interested personsthe ability to participate and provide input on the RFP design. We remove, however, the 60day advance notice requirement proposed in Staff's straw proposal. This requirementapparently was based on current practice under Order No. 91-1383, which contemplatesCommission review and approval of a draft IRP in 60 days. Under the guideline adoptedabove, the utility must widely distribute copies of the draft RFP and conduct workshops withinterested parties. We decline to establish a minimum time period for such activities, butexpect the utilities to provide ample time to ensure an adequate opportunity for public input.

In response to PacifiCorp's concerns about minimum bidder requirements, weaccept Staff's explanation that its straw proposal was not intended to alter the principles,

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ORDER NO. 06-446

articulated in Order No. 91-1383, that utilities should address the credit and capability ofprospective bidders in order to protect ratepayers.

We agree with OOOE with respect to qualifying facilities under the PublicUtility Regulatory Policies Act, and include language that prohibits utilities from excludingQualifying Facilities larger than 10 MW from participating. In addition, we add language tothe guideline to make clear that a utility should be willing to negotiate on the terms of thestandard contract to achieve comparable outcomes. We conclude, however, that ODOE'sother concern about bidders that lack transmission capabilities is more appropriatelyaddressed during the review of an individual RFP.

Finally, with respect to evaluation and scoring criteria, we conclude thatbidders should be given enough information during the RFP design process to determine howimportant different project and bidder characteristics are to the utility. Specific scoringcriteria, such as points awarded for non-price factors, will be limited to non-bidding partiesunder the terms of Guideline 12, further addressed below.

7. RFP Approval: The Commission will solicit public comment on theutility's final draft RFP, including the proposed minimum bidder requirements and bidscoring and evaluation criteria. Public comment and Commission review shouldfocus on:(1) the alignment of the utility's RFP with its acknowledged IRP; (2) whether the RFPsatisfies the Commission's competitive bidding guidelines; and (3) the overallfairness of theutility's proposed bidding process. After reviewing the RFP and the public comments, theCommission may approve the RFP with any conditions and modifications deemed necessary.The Commission may consider the impact ofmulti-state regulation, including requirementsimposed by other states for the RFP process. The Commission will target a decision within60 days after the filing of the final draft RFP, unless the utility requests a longer reviewperiod when it submits the final draft RFP for approval.

Comment

We made two primary modifications to Staffs straw proposal to addressconcerns raised by commenting parties. First, in response to ICNU's questions about thelength of time needed for Commission approval of an RFP, we extend the review period by15 days, to 60 days. While we expect that interested persons will have been involved in theRFPprocess during its drafting and will have the opportunity to raise concerns and obtaininformation prior to the utility formally filing the RFP, we extend the process to address anyconcerns about discovery. Second, we add language proposed by PacifiCorp to clarify thefocus of the Commission's review in approving an RFP, and to acknowledge that this reviewmay include consideration of requirements imposed by other state commissions.

To respond to other concerns about the effect of Commission approval of anRFP, we clarify that Commission approval is simply a determination on the three criteria setout in the guideline-that is, whether the utility's RFP is consistent with its acknowledgedIRP, whether the RFP satisfies these guidelines, and whether the utility's proposed biddingprocess is fair. The approval is simply that: the RFP meets these criteria, does not meet the

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ORDER NO. 06-446

criteria, or would meet the criteria with certain conditions and modifications. Anyratemaking determinations would occur at a later time.

8. Benchmark Resource Score: The utility must submit a detailed scorefor any Benchmark Resource, with supporting cost information, to the Commission and IEprior to the opening ofbidding. The score should be assigned to the Benchmark Resourceusing the same bid scoring and evaluation criteria that will be used to score market bids.Information provided to the Commission and IE must include any transmissionarrangements, and all other information necessary to score the Benchmark Resource. If,during the course of the RFP process, the utility, with input from the IE, determines thatbidder updates are appropriate, the utility may also update the costs and score for theBenchmark Resource. The IE will review the reasonableness of the score(s) for theBenchmark Resource. The information provided to the Commission and IE will be sealedand held until the bidding in the RFP has concluded.

Comment

We adopt this guideline without substantive modification from Staff's strawproposal. We acknowledge PGE's concern about the inclusion of transmissionarrangements, and agree that a utility should not be required to reveal this information toother bidders. As PGE notes, a utility should have the same opportunity as other bidders tokeep this type of information blinded from other bidders.

We reject ICNU's suggestion that, if bidder updates are allowed, the IEshould evaluate whether the opportunity for updates resulted in favoring the utility or anaffiliate resource. We are satisfied that, in such situations, the opportunity to rebid or provideupdates would be extended to all bidders. Any concerns about the timing of the updates maybe raised during the acknowledgement for the final short-list of bids. We also find that theguidelines are clear enough on the equal treatment of the Benchmark Resource, and concludethere is no need to add language, proposed by ODOE, to clarify that the term "bids" includesthe Benchmark Resource.

9. Bid Scoring and Evaluation Criteria:

a. Selection ofan initial short-list ofbids should be based on price andnon-price factors, and provide resource diversity (e.g., with respect to fuel type and resourceduration). The utility should use the initial prices submitted by the bidders to determine eachbid's price score. The price score should be calculated as the ratio of the bid's projectedtotal cost per megawatt-hour to forward market prices, using real-Ievelized or annuitymethods. The non-price score should be based on resource characteristics identified in theutility's acknowledged IRP Action Plan (e.g., dispatch flexibility. resource term, portfoliodiversity, etc.) and conformance to the standardform contracts attached to the RFP.

b. Selection of the final short-list ofbids should be based, in part, on theresults ofmodeling the effect of candidate resources on overall system costs and risks. Theportfolio modeling and decision criteria used to select the final short-list ofbids must be

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ORDER NO. 06-446

consistent with the modeling and decision criteria used to develop the utility's acknowledgedIRP Action Plan. The IE must have full access to the utility's production cost and riskmodels.

c. Consideration of ratings agency debt imputation should be reservedforthe selection of the final bids from the initial short-list ofbids. The Commission may requirethe utility to obtain an advisory opinion from a ratings agency to substantiate the utility'sanalysis and final decision.

Comment

CUB, NWEC, and RNP filed joint comments recommending severalmodifications to Staffs straw proposal on bid scoring and evaluation criteria. First, thepublic interest parties recommend that the selection of the initial short-list of bids should notbe based on a comparison of resources of different fuel types. Rather, they prefer selectionfrom pools of each type of resource. Staff disagrees, and responds that a utility may improvediversity by having an initial short-list with different fuel types from an all-source bid, or byrunning simultaneous resource specific solicitations. Staff explains that resource-specificbids should occur at the same time in case the market yields different costs than assumed inthe IRP, indicating a preference to acquire some types of resources over others. We agreewith Staff's proposed approach, but add language in subsection (a) to require resourcediversity in the initial short-list.

CUB, NWEC, and RNP also recommend additional procedures be used if thebids and other updated information are significantly different from the original inputs used inthe IRP. The parties define "significantly different" to mean that the average bids in theinitial short-list for each resource type differ by more than 20 percent from those modeled inthe IRP. If that threshold is met or exceeded, the public interest parties contend that theutility should re-run the modeling used in the IRP. Staff, PGE and PacifiCorp oppose theproposal. Staff explains that such additional process would divert time and resourcesdetermining whether any bid differences are significant, rather than focusing those resourceson determining the best combination of bids. We agree and prefer to view the competitivebidding process as a search process aimed at helping find the best combination of resourcesfor ratepayers. As stated in subsection (b) of this guideline, we expect the utility to apply thesame analytical approach and judgment in selecting the final short-list as it did in developingits acknowledged IRP Action Plan. For example, it should apply the same tradeoff betweencost and risk in the bid process as it did in the IRP, and not simply focus on expected cost atthe acquisition stage.

Staff, PGE and ODOE recommend other refinements to the guideline.Following publication of its straw proposal, Staff filed comments proposing that utilities beallowed to propose environmental scoring based on the environmental analysis included in itsacknowledged IRP. PGE supports Staffs suggestion, adding that it provides the flexibilityneeded to adapt to changing circumstances and links the environmental scoring to the IRPanalysis process. We share Staff's and PGE's view, but conclude that no modifications arerequired, given the guideline's link to the IRP in subsections (a) and (b). Similarly, we agree

11

ORDER NO. 06-446

with ODOE that utilities should, in selecting initial short-list bids and the final short-list,include the transmission and generation integration costs. Again, we believe the guideline, aswritten, includes that requirement.

Idaho Power and PGE raise questions about the ability of a utility to providean IE with access to production cost and risk models. The utilities explain that certainlicensing agreements with software vendors may preclude an IE's ability to access theseanalytical tools. We acknowledge the utilities' concerns. We expect, however, that utilitieswill take all reasonable actions necessary to obtain a license that allows an IE to access thesemodels, and will justify any failure to do so when seeking RFP approval.

Finally, many parties focus on how to address debt imputation for powerpurchase agreements (PPA). PGE and PacifiCorp want debt imputation considered at allstages of bidding and scoring, while Staff recommends that debt imputation only beconsidered at the final stage. Other parties, such as NIPPC, recommend that debt imputationnot be considered at all in the bid scoring and evaluation.

To consider debt imputation at all stages is too cumbersome a process and notnecessary to meet the goals of these guidelines. We understand that by considering debtimputation solely at the final stage, we risk giving an advantage to resources with imputeddebt in determining the initial short-list. We do not consider that risk to be significant,however. Further, we agree with Staff that reserving analysis of imputed debt until the finalstage decreases the possibility of disqualifying a power purchase agreement that should beconsidered.

10. Utility and IE Roles in the RFP Process:

a. The utility will conduct the RFP process, score the bids, select the initialand final short-lists, and undertake negotiations with bidders.

b. The IE will oversee the RFP process to ensure that it is conductedfairlyand properly.

c. If the RFP does not allow affiliate bidding and does not includeownership options (i.e., the utility is not including a Benchmark Resource or consideringownership transfers), the IE will check whether the utility's scoring ofthe bids and selectionof the short-lists are reasonable.

d. If the RFP allows affiliate bidding or includes ownership options, the IEwill independently score the utility's Benchmark Resource (if any) and all or a sample of thebids to determine whether the selections for the initial and final short-lists are reasonable.In addition, the IE will evaluate the unique risks and advantages associated with theBenchmark Resource (if used), including the regulatory treatment ofcosts or benefits relatedto actual construction cost and plant operation differing from what was projectedfor theRFP.

12

ORDER NO. 06-446

e. Once the competing bids and Benchmark Resource (ifused) have beenscored and evaluated by the utility and the IE, the two should compare results. The utilityand IE should attempt to reconcile and resolve any scoring differences. If the two are unableto agree, the IE should explain the differences in its Closing Report.

Comment

We made several revisions to this guideline as originally proposed in Staffsstraw proposal. First, we modify the language to make it consistent with our earlier decisionto require an IE for all RFPs. Second, we clarify the role of the IE in the RFP process.ICNU recommends, and Staff concurs, that the IE should independently review, rather thanmerely "validate," the utility'S bid scoring. We agree, provided that the RFP allows affiliatebidding or includes ownership options. We add language to clarify this role, and to requirethe IE to score the Benchmark Resource, and as many bids as the IE believes to be necessaryto conclude that the process was fair and the result was reasonable. We do not impose such arequirement where the utility is not including a Benchmark Resource or consideringownership transfers or affiliate bids. In such cases, the IE need only validate the utility'sscoring.

Third, lCND also proposes that, if differences arise between the utility's andthe IE's scoring, the IE should be under no obligation to work with the utility to reconcile thedifferences. On this matter, we share Staffs opinion that the IE and the utility shouldattempt to resolve differences in bid scoring and evaluation. We agree with ICNU, however,that compromise should not be required, and have added language accordingly.

Fourth, pursuant to PGE's proposal, we modify language, set forth insubsection (d), to make the discussion on risk more neutral. We reject, however,PacifiCorp's recommendations that the Benchmark Resource option should not be treatedand evaluated like a bid and that non-price factors, such as possible cost overruns, should notbe considered. We recognize that Benchmark Resources are different from other bids in thatprice and performance is not fixed. Such differences, however, emphasize the need toconsider the additional risk customers bear in deciding the best option from the RFP. Thisrisk to customers is present even if the actual costs of the Benchmark Resource are equallylikely to be lower or higher than projected in the RFP.

11. IE Closing Report: The IE will prepare a Closing Report for theCommission after the utility has selected the final short-list. In addition, the IE will makeany detailed bid scoring and evaluation results available to the utility, Commission staff, andnon-bidding parties in the RFP docket, subject to the terms ofa protective order.

13

ORDER NO. 06-446

Comment

While this guideline generated little discussion or dissension, we modify thelanguage of straw proposal to recognize that the IE will be involved in the acknowledgmentprocess (See Guideline 13), and should complete the Closing Report before then, and toclarify that the IE's bid scoring and evaluation results will be subject to protective order (SeeGuideline 12).

12. Confidential Treatment of Bid and Score Information: Biddinginformation, including the utility's cost support for any Benchmark Resource, as well asdetailed bid scoring and evaluation results will be made available to the utility, Commissionstaff and non-bidding parties under protective orders that limit use of the information to RFPapproval and acknowledgment and to cost recovery proceedings.

Due to the competitive nature of the power market and generationdevelopment business, PacifiCorp raises concerns about the disclosure of detailed bid scoringand evaluation results to non-bidding consumer advocates. PacifiCorp explains that theseparties may include entities that could use this information to the commercial disadvantage ofbidders or the utility. RNP and Staff believe that such information should be made available.Staff suggests that PacifiCorp's concerns could be addressed through heightened protectiveprocedures. We agree with RNP and Staff that non-bidding parties should have access to thisinformation and have written the guideline accordingly.

13. RFP Acknowledgment: The utility may request that the Commissionacknowledge the utility's selection of the final short-list ofRFP resources. The IE willparticipate in the RFP acknowledgment proceeding. Acknowledgment has the same meaningas assigned to that term in Commission Order No. 89~507. RFP acknowledgment will havethe same legal force and effect as IRP acknowledgment in any future cost recoveryproceeding. The utility's request should discuss the consistency of the final short-list withthe company's acknowledged IRP Action Plan.

The final suggested guideline by Staff in its straw proposal provides the utilityan opportunity to ask for Commission acknowledgment of the final short-list of RFPresources. ICND questions the value of this process, noting that it does not appear to limitutility bias or otherwise improve the process. To the contrary, leND suggests such approvalonly benefits utilities by providing greater assurance that their resource procurement processwill be found reasonable in a subsequent rate proceeding. If the Commission is inclined toacknowledge the results of the RFPs, ICNU recommends the Commission defer this issueuntil it has been proven that the utilities are not biasing the results. PacifiCorp, Idaho Power,PGE, NIPPC and Staff favor Commission acknowledgement. These parties contend suchacknowledgement would have the same meaning as that used in the IRP process.Consequently, Staff and the other parties believe that acknowledgment would not restrict theCommission's ability to disallow costs of resources acquired through the RFP process.

We adopt the proposal to allow the utilities the ability to request Commissionacknowledgement. Such Commission action would carry the same weight as an

14

ORDER NO. 06-446

acknowledgment of an IRP-that is, a conclusion that the final short-list seems reasonable,based on the information provided to the Commission at that time. It will not, as ICND fears,provide a guarantee of favorable ratemaking treatment during rate recovery. Moreover,Commission acknowledgement is not mandatory. The Commission may decline toacknowledge. We also direct the utility to explain whether its final short-list is consistentwith the near-term resource acquisitions identified in its acknowledged IRP.

ODOE recommends that the Commission should acknowledge resourceamounts, rather than final short-lists. OOOE provides little explanation to support thisrecommendation, but it appears the agency is concerned that the utility will not acquiresufficient resource diversity. We decline OOOE's proposal. If adopted, we are concernedthat such acknowledgment would segment the short-list and weaken the utility's bargainingposition. Moreover, OOOE's apparent concerns about resource diversity are mitigated by theutility'S ultimate responsibility for obtaining the best deal in terms of cost and risk throughthe RFP process.

CONCLUSION

For the reasons set forth above, we conclude that the RFP guidelines, attachedas Appendix A, should be adopted. These guidelines become effective on the date this orderis entered, and apply to all pending and future RFP proceedings.

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ORDER NO. 06-446

ORDER

adopted.IT IS ORDERED that the RFP guidelines, attached as Appendix A, are

AUG 1 02006Made, entered, and effective--~-=---"""--"~~'-------

~-~-cgRa~~~Commissioner

A party may request rehearing or reconsideration of this order pursuant to ORS 756.561. Arequest for rehearing or reconsideration must be filed with the Commission within 60 days ofthe date of service of this order. The request must comply with the requirements in OAR 860014-0095. A copy of any such request must also be served on each party to the proceeding asprovided by OAR 860-013-0070(2). A party may appeal this order by filing a petition forreview with the Court ofAppeals in compliance with ORS 183.480-183.484.

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ORDER NO. 06-446

UM 1182Competitive Bidding Guidelines

1. RFP Requirement: A utility must issue an RFP for all Major Resourceacquisitions identified in its last acknowledged IRP.' Major Resources are resources withdurations greater than 5 years and quantities greater than 100 MW.

2. Exceptions to RFP Requirement: A utility is not required to issue an RFPunder the following circumstances:

a. Acquisition of a Major Resource in an emergency or where there is a timelimited resource opportunity ofunique value to customers.

b. Acknowledged IRP provides for an alternative acquisition method for a MajorResource.

c. Commission waiver on a case-by-case basis.

Within 30 days of a Major Resource acquisition under Subsection (a) above, the utilitymust file a report with the Commission explaining how the requisite conditions have beenmet for acting outside of the RFP requirement. The report must be served on all theparties and interested persons in the utility's most recent rate case, RFP and IRP dockets.

When requesting a waiver under Subsection (c) above, the utility must file its requestwith the Commission and serve the request on all parties and interested persons in theutility's most recent general rate case, RFP and IRP dockets. The Commission will issuean order addressing the waiver request within 120 days, taking such oral and writtencomments as it finds appropriate under the circumstances.

3. Affiliate Bidding: A utility may allow its affiliates to submit RFP bids. Ifaffiliates are allowed to bid, the utility must blind all RFP bids and treat affiliate bids thesame as all other bids.

4. Utility Ownership Options: A utility may use a self-build option in an RFP toprovide a potential cost-based alternative for customers. A site-specific, self-build optionproposed in this way is known as a Benchmark Resource. A utility may also considerownership transfers within an RFP solicitation.

5. Independent Evaluator (IE): An IE must be used in each RFP to help ensurethat all offers are treated fairly. Commission staff, with input from the utility andinterested, non-bidding parties, will recommend an IE to the Commission, which willthen select or approve an IE for the RFP. The IE must be independent of the utility andlikely, potential bidders and also be experienced and competent to perform all IEfunctions identified in these Guidelines. The IE will contract with and be paid by the

1 APPENDIX APAGELOFL

ORDER NO. 06-446

utility. The IE should confer with Commission staff as needed on the IE's duties underthese Guidelines. The utility may request recovery of its payments to the IE in customerrates.

6. RFP Design: The utility will prepare a draft RFP and provide it to all parties andinterested persons in the utility's most recent general rate case, RFP and IRP dockets.The utility must conduct bidder and stakeholder workshops on the draft RFP. The utilitywill then submit a final draft RFP to the Commission for approval, as describedin paragraph 7 below. The draft RFPs must set forth any minimum bidder requirementsfor credit and capability, along with bid evaluation and scoring criteria. The utility mayset a minimum resource size, but Qualifying Facilities larger than 10 MW must beallowed to participate. The final draft submitted to the Commission must also includestandard form contracts. However, the utility must allow bidders to negotiate mutuallyagreeable final contract terms that are different from ones in the standard form contracts.The utility will consult with the IE in preparing the RFPs, and the IE will submit itsassessment of the final draft RFP to the Commission when the utility files for RFPapproval.

7. RFP Approval: The Commission will solicit public comment on the utility'sfinal draft RFP, including the proposed minimum bidder requirements and bid scoringand evaluation criteria. Public comment and Commission review should focus on: (1) thealignment of the utility's RFP with its acknowledged IRP; (2) whether the RFP satisfiesthe Commission's competitive bidding guidelines; and (3) the overall fairness of theutility's proposed bidding process. After reviewing the RFP and the public comments,the Commission may approve the RFP with any conditions and modifications deemednecessary. The Commission may consider the impact ofmulti-state regulation, includingrequirements imposed by other states for the RFP process. The Commission will target adecision within 60 days after the filing of the final draft RFP, unless the utility requests alonger review period when it submits the final draft RFP for approval.

8. Benchmark Resource Score: The utility must submit a detailed score for anyBenchmark Resource, with supporting cost information, to the Commission and IE priorto the opening ofbidding. The score should be assigned to the Benchmark Resourceusing the same bid scoring and evaluation criteria that will be used to score market bids.Information provided to the Commission and IE must include any transmissionarrangements and all other information necessary to score the Benchmark Resource. If,during the course of the RFP process, the utility, with input from the IE, determines thatbidder updates are appropriate, the utility may also update the costs and score for theBenchmark Resource. The IE will review the reasonableness of the score(s) for theBenchmark Resource. The information provided to the Commission and IE will besealed and held until the bidding in the RFP has concluded.

2 APPENDIX IIPAGE .AOF-!L.

ORDER NO. 06-446

9. Bid Scoring and Evaluation Criteria:

a. Selection of an initial short-list ofbids should be based on price and non-pricefactors and provide resource diversity (e.g., with respect to fuel type andresource duration). The utility should use the initial prices submitted by thebidders to determine each bid's price score. The price score should becalculated as the ratio of the bid's projected total cost per megawatt-hour toforward market prices using real-Ievelized or annuity methods. The non-pricescore should be based on resource characteristics identified in the utility'sacknowledged IRP Action Plan (e.g., dispatch flexibility, resource term,portfolio diversity, etc.) and conformance to the standard form contractsattached to the RFP.

b. Selection of the final short-list ofbids should be based in part on the results ofmodeling the effect of candidate resources on overall system costs and risks.The portfolio modeling and decision criteria used to select the final short-listofbids must be consistent with the modeling and decision criteria used todevelop the utility's acknowledged IRP Action Plan. The IE will have fullaccess to the utility's production cost and risk models.

c. Consideration of ratings agency debt imputation should be reserved for theselection of the final bids from the initial short-list ofbids. The utility shouldobtain an advisory opinion from a ratings agency to substantiate its analysisand final decision, if requested by the Commission.

10. Utility and IE Roles in RFP Process:

a. The utility will conduct the RFP process, score the bids, select the initial andfinal short-lists, and undertake negotiations with bidders.

b. The IE will oversee the RFP process to ensure that it is conducted fairly andproperly.

c. If the RFP does not allow affiliate bidding and does not include ownershipoptions (i.e., the utility is not including a Benchmark Resource or consideringownership transfers), the IE will check whether the utility's scoring of the bidsand selection of the short-lists are reasonable.

d. If the RFP allows affiliate bidding or includes ownership options, the IE willindependently score the utility's Benchmark Resource (if any) and all or asample of the bids to determine whether the selections for the initial and finalshort-lists are reasonable. In addition, the IE will evaluate the unique risksand advantages associated with the Benchmark Resource (ifused), includingthe regulatory treatment of costs or benefits related to actual construction costand plant operation differing from what was projected for the RFP.

3 APPENDIX ;11PAGE--3.....0FL

ORDER NO. 06-446

e. Once the competing bids and Benchmark Resource (ifused) have been scoredand evaluated by the utility and the IE, the two should compare results. Theutility and IE should attempt to reconcile and resolve any scoring differences.If the two are unable to agree, the IE should explain the differences in itsClosing Report.

11. IE Closing Report: The IE will prepare a Closing Report for the Commissionafter the utility has selected the final short-list. In addition, the IE will make any detailedbid scoring and evaluation results available to the utility, Commission staff, and nonbidding parties in the RFP docket subject to the terms of a protective order.

12. Confidential Treatment of Bid and Score Information: Bidding information,including the utility's cost support for any Benchmark Resource, as well as detailed bidscoring and evaluation results will be made available to the utility, Commission staff andnon-bidding parties under protective orders that limit use ofthe information to RFPapproval and acknowledgment and to cost recovery proceedings.

13. RFP Acknowledgment: The utility may request that the Commissionacknowledge the utility's selection ofthe final short-list ofRFP resources. The IE willparticipate in the RFP acknowledgment proceeding. Acknowledgment has the samemeaning as assigned to that term in Commission Order No. 89-507. RFPacknowledgment will have the same legal force and effect as IRP acknowledgment in anyfuture cost recovery proceeding. The utility's request should discuss the consistency ofthe final short-list with the company's acknowledged IRP Action Plan.

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Documents

VIA ELECTRONICFILING ANDOVERNIGHTDELIVERYLisa.c.schwartz(cV,state.or.us Ann English Gravatt Renewable Northwest Project 917 SW Oak Ste. 303 Portland, OR 97205 [email protected] Coordinator,